New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

Vincent J. Mangini, Shareholder in Stark & Stark's Real Estate, Zoning & Land Use Group, authored the article A Primer on Green Leases: Special considerations that permeate the negotiation process for the March 1, 2010 edition of the New Jersey Law Journal.

Mr. Mangini discusses how the introduction of green building principles and the heightened interest in energy efficiency and cost savings has begun to influence the negotiation and operation of commercial leases and the build-out of tenant improvements. The article presents a summary and analysis of the issues that landlords and tenants should be aware of and what they need to build into their due diligence when dealing with a high-performance building.

You can read the full article online here. (PDF)

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The following is a portion of an article entitled Hot and Green Legal Topics written by Vincent J. Mangini and Gary S. Forshner taken from the December 2009 edition of The Cutting Edge:

The construction of energy efficient buildings, the practice of conserving natural resources and recycling and the development and use of alternative fuels have all become prevalent concerns in our culture.  Not surprisingly, these concepts have thoroughly permeated the contemporary legal landscape providing both benefits and burdens to individuals and businesses alike.  The purpose of this article is to provide a summary of a few of the laws and incentives that impact the building and real estate industry.

Water Reuse Program
In light of the increasing demand placed on water supplies and the desire to reduce the impact of drought conditions, interest has grown in water reclamation and reuse, which entails the conversion of wastewater into reclaimed water through the application of specialized treatment for beneficial uses, such as landscape and agricultural irrigation, fire protection, dust control and street cleaning.
 

• The term “reclaimed water for beneficial reuse" (RWBR) is defined in the New Jersey Administrative Code to mean “[w]ater that meets restricted access or public access reuse requirements specified in a NJPDES permit that authorizes that water to be directly reused for non-potable applications in place of potable water, diverted surface water, or diverted groundwater.” N.J.A.C. 7:14A-1.2. 
• Under current State policy, as manifested through the New Jersey Department of Environmental Protection’s technical manual entitled “Reclaimed Water for Beneficial Reuse," dated January 2005 (“Guidelines”), the preparation of a water reuse feasibility study may be required for New Jersey Pollutant Discharge Elimination System (NJPDES) permits involving all wastewater treatment and disposal facilities with a design flow of at least 100,000 gallons per day and for water supply allocation permits involving the use of water for non-potable and consumptive uses. See also N.J.A.C. 7:19-2.2(g) (requiring applicant for water supply allocation permit to consider lower quality water for non-potable purposes).  Indeed, in issuing water allocation permits the DEP may require users to consent to the use of reclaimed water should such lower quality water become available, potentially creating a host of additional issues and challenges for builders.
• Any person, who actually produces or is seeking to produce RWBR is required under current State regulations to utilize the Guidelines and to obtain a NJPDES permit. N.J.A.C. 7:14A-2.15.
• A building project that makes use of recycled wastewater for landscape irrigation or sewage conveyance (i.e. toilet flushing) may earn water efficiency credits that can be applied towards certification under the Leadership in Energy and Environmental Design Green Building Rating System for New Construction (LEED-NC) formulated by the United States Green Building Council.

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In today’s harsh economic climate, a general contractor or subcontractor is often faced with non-payment from a project owner.  The question then becomes what is the best fashion in order to collect the unpaid balance which is due the general contractor or subcontractor.  As a general contractor, you have a few options.  The first option is to attempt to negotiate a resolution with the owner.  Another option is to file a lawsuit.  If a lawsuit is the preferred option, it is suggested that a Lien Claim be filed within ninety-days of the last date of materials or services were provided pursuant to N.J.S.A. 2A:44(A)-3.  This secures the general contractor’s interest in the property and may provide it with leverage to facilitate a settlement.

For a subcontractor, the best process in which to collect an unpaid amount becomes more complex.  Pursuant to the relevant Lien Statute, N.J.S.A. 2A:44-126, a “subcontractor” is any person or party who has a contract to provide labor or materials with a contractor or with a subcontractor who has a contract with the general contractor.  The purpose of this definition is to limit who may file a Lien Claim against the property.  Like a general contractor, a subcontractor may attempt to resolve the dispute as to the unpaid balance with the general contractor or the subcontractor who hired them.  In the absence of a quick resolution, however, it is often suggested that a Lien Claim be filed by a subcontractor or sub-sub-contractor on the project.  Unfortunately for a lot of subcontractors, this is when a critical error is made with regard to filing a Lien Claim.

Pursuant to N.J.S.A. 2A:44(A)-3, the Lien Claimant shall file a Lien against the owner of the property, or the tenant of the property for whom the contract to perform services exists.  The critical point is that a Lien cannot be filed against the property owner if the tenant contracted to have the work done and the improvement was not authorized in writing by the owner of the property.  This is critical because if a contractor files a Lien Claim against the property owner and not the tenant as well and it is later determined that the improvement was not authorized by the owner, the Lien Claim is invalid and the subcontractor may be left without a claim against the tenant.  As such, the best practice is to always file a Lien Claim against the tenant who is occupying the leased property and for whom the work is being performed and against the property owner as well.  At any time, the contractor can withdraw the Lien Claim against the property owner, however, continue against the tenant if it is found that the improvement was not authorized in writing.  If this procedure is not followed and more than ninety days have passed since the last day materials and services were provided, the contractor may lose its right to bring a Lien Claim against the tenant.

As always, a lawsuit to foreclose upon the Lien must be commenced within thirty days upon request by the tenant or owner or within one year of the date of the Lien Claim was filed, otherwise it will expire.  A subcontractor or sub-subcontractor does not lose its rights to proceed against the party whom directly contracted with it, however, an action to foreclose upon the Lien Claim as well only gives the contractor further leverage.

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Due to high energy costs and concern about the environment (and the availability of tax credits and grants), homeowners and businesses are giving greater consideration to renewable energy.  Before undertaking the installation of a renewable energy facility, such as solar panels, it is important to conduct due diligence, which may include, among other things, the procurement of easements from neighbors to allow for unobstructed access to sunlight.  Fortunately, New Jersey specifically recognizes easements for solar energy facilities and has set forth the minimum content for such easements in the Solar Easements Act.  However, while providing useful guidelines, this statute does not require the owner of property adjoining a solar energy facility to grant a solar easement.  Rather, the prospective solar energy customer must negotiate with surrounding property owners and pay whatever consideration the market may bear.  In light of the complexities involved in negotiating the terms and conditions for such an easement agreement and in preparing the easement document, potential solar energy customers would be well advised to seek the assistance of an attorney in performing this task.

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This afternoon Governor Christie signed an executive order suspending the work of the Council on Affordable Housing (COAH) for 90 days, except as necessary, in order to prevent the loss of affordable housing opportunities. The executive order calls for a five person task force to be appointed by the Governor. The task force is charged with studying various aspects of affordable housing and reporting to Governor within 90 days.

You can view a copy of the executive order here. Municipalities are constitutionally required to exercise their zoning discretion to allow for reasonable opportunities for affordable housing. Under the Fair Housing Act, COAH was created for the purpose of creating and enforcing those obligations. Unfortunately, most on all sides of the debate over affordable housing have agreed that COAH has fallen far short of it's obligations and created at least as many problems as it has opportunities. Indeed, State Senator Raymond Lesniak has introduced legislation seeking to abolish COAH and create totally new mechanisms for creation of affordable housing. Where and how this issue will end remains to be seen, but certainly the Governor and Legislature are shaking up the "house" as relates to affordable housing.

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Among the several pieces of “green” legislation, that Governor Jon Corzine signed just prior to leaving office was a bill (A3218) that creates a new, temporary 11-member public body to be known as the Solar and Wind Energy Commission.  This new law - approved as P.L. 2009, c. 239 - authorizes the Commission “to conduct a thorough and comprehensive study to examine State owned property and determine where solar and wind energy installations would be feasible[,]” which shall include a discussion of the financial implications of such installations, projected energy and financial savings, potential use of net metering and a host of other topics.  Although there is no limit to the number of documents that the Commission may produce under the statute relating to this study, it must submit to the Governor and the Legislature and make available to the public a final report containing its findings, conclusions and recommendations within one year after its organization.  Thirty days thereafter, the Commission shall expire.  It will be interesting to see what this year-long effort will generate.

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 On January 16, 2010, just prior to leaving office as Governor, Jon Corzine signed into law what I am going to refer to as the "solar farm bill" (P.L. 2009, c. 213), which authorizes a person who owns preserved farmland to install and operate biomass, solar or wind energy generation facilities, structures and equipment on the farm for the purpose of generating power or heat.  Among other things, this bill also adds to the list of permitted activities that may be conducted on commercial farms "the generation of power or heat from biomass, solar, or wind energy" and, as such, it will serve as a nice companion to a recent amendment to the Municipal Land Use Law (P.L. 2009, c. 35), which allows a “renewable energy facility” to be located on a parcel or parcels of land owned by the same person comprising at least 20 contiguous acres within every municipal industrial zoning district, signed into law by the former Governor in March of last year.

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On Monday, January 18, 2010, as one of his last acts before leaving office, former Governor Corzine signed an Amendment to the Permit Extension Act (A4347) (the “PEA Amendment”) further extending the validity of most land use and construction approvals and permits (hereinafter “Approvals”), which would otherwise expire, until at least December 31, 2012.  Due to the recession, the Permit Extension Act of 2008, N.J.S  40:55D-136.1, et seq., (the “PEA”) was initially adopted in 2008  to provide for a tolling of expiration for specified Approvals through at least July 1, 2010 (together with additional extensions thereafter that might apply).  In order for the validity of an Approval to be extended under the PEA, it must have been valid or issued on or after January 1, 2007.

The time period for validity of Approvals is now further extended by the PEA Amendment until at least December 31, 2012 before the time begins to run on the validity of an Approval.   Subsequent to December 31, 2012, permits and approvals have a phased expiration whereby any unexpired portion of the term of the Approval further extends the Approval, limited to up to six (6) months from December 31, 2012, i.e., no later than June 30, 2013. In addition to the foregoing, a developer may exercise any unexercised extension applicable to such Approval. For example, if a developer were issued a permit on November 30, 2010 that was valid for two (2) years with the right to an additional one (1) year extension, the PEA Amendment would stop the clock on the expiration of this permit that would otherwise expire on November 30, 2012 and extend the expiration of the permit from November 30, 2012 to June 30, 2013. Should the developer be timely granted the one (1) year extension applicable under this scenario, the June 30, 2013 expiration would thereby be extended until June 30, 2014.

The Amendment is applicable to most municipal, county, regional and state development permits and approvals, but sets forth specific exceptions and limitations.  Property owners and developers with permits and approvals that are effective on or after January 1, 2007 should seek legal advice to determine the effect the PEA and the PEA Amendment may have on their development rights.

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Gary S. Forshner, Shareholder in Stark & Stark's Real Estate Zoning & Land Use Group, was quoted in the January 13, 2010 Trenton Times article, Developer shares plans for enlarged Hamilton ShopRite, and the January 14, 2010 Trenton Times article, ShopRite decision on hold in Hamilton.

The articles discuss the recent plan to renovate the ailing Hamilton Square Shopping Center and enlarge its ShopRite supermarket from 53,000 square feet to 85,789 square feet. The shopping center, located at the corner of Route 33 and Yardville-Hamilton Square Road, currently has a vacancy rate of 30 percent or more.

The plans were introduced last week to the township zoning board and a decision will be made after the board meets for a final vote on the proposal on January 26, 2010 at the Hamilton Township Municipal Building. Mr. Forshner who represents Levin Properties, which owns the site, states, "We need to make sure that the locations along Route 33 are up-to-date, well-tended and rehabilitated. You don't want to end up with a blight situation along Route 33."

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The New Jersey Clean Energy Program administered by the New Jersey Board of Public Utilities through its Office of Clean Energy offers a host of financial incentives.  Among these is the Pay for Performance Program, which is funded by the societal benefits charge authorized by the New Jersey Electric Discount and Energy Competition Act.  Under this program, a qualifying utility customer may receive up to 50% of the total cost of energy-efficient measures recommended by an energy efficiency expert, also known as a program “partner,” who the customer selects from a pre-approved list, provided that the implementation of such measures will achieve an energy savings of at least 15%.  A customer participating in the Pay for Performance Program may also receive funds to offset the cost of the program partner’s services at a rate of $0.10 per square foot up to a maximum of $50,000 or 50% of the annual energy cost of the building or facility that is the subject of the application for benefits, whichever is less.  There are also advanced measure incentives for combined heat and power under the program.

In order to be eligible for the Pay for Performance Program, (1) an applicant must be a customer of a regulated electric utility and/or gas utility in New Jersey, including Atlantic City Electric, Jersey Central Power & Light, Rockland Electric Company, New Jersey Natural Gas, Elizabethtown Gas, PSE&G and South Jersey Gas, and (2) the project for which an application is made must consist of one or more commercial, industrial, institutional or multi-family residential structures having over 200 kW average annual peak demand electrical usage (if the buildings are preexisting) or having at least 50,000 square feet or more of planned conditioned space (if the project calls for new construction).  Individual buildings, as well as multiple buildings in complexes owned by a single person or entity, may qualify for benefits under the program provided that they meet the above criteria.  Condominium associations may also be eligible to receive incentives for energy-efficient measures relating to common elements under this program.

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