SRECs are those credits purchased by power companies for the production of solar energy. Given that solar energy facility production has exceeded expectations, creating a glut of SRECs available for purchase, the value of the SRECs have dropped to less than half of the pre-glut value.
 

The newly adopted New Jersey Energy Master Plan proposes to accelerate the purchasing obligation of utilities, or take other actions to stabilize the SREC market, and therefore may improve the value of SRECs and increase the ability to finance solar energy facilities. That, along with ongoing federal tax credits, create the opportunity for New Jersey to continue to be one of the national leaders in solar energy production, currently second only to California.
 

However, one significant component of solar energy facilities is the cost of the solar panels themselves. A recent report conducted by Science Daily concludes that the cost of solar panels has dropped by 70% since 2009, significantly enhancing opportunities to make solar energy production a more attractive investment for those producing and selling energy as well as those building net-metered energy facilities, providing energy for on-site use.
 

For the foregoing reasons, opportunities and profitability of solar energy continues to increase and should be considered by most property owners, including those that might have declined to pursue solar energy as recently as a few months ago. Below is the link to the Science Daily article discussing the huge drop is the cost of solar panels.

The New Jersey Tax Court recently answered this question in a case where the court sided with the property owner and denied the municipality’s motion to dismiss a tax appeal.  See Cam Gar v. Verona Township, Docket No. 004838-2011, NJ Tax Court, Nov. 9, 2011 [link]. 
 

Verona Township sought to dismiss a tax appeal alleging the property owner failed to respond to a Chapter 91 request.  The property owner admitted it received the request, but argued it responded to the request in a timely manner by mailing the completed response to the assessor.  To support its position, the property owner offered the testimony of its bookkeeper, a 16-year employee whose job responsibilities include responding to Chapter 91 requests sent for the numerous properties managed by her employer. The bookkeeper went through in detail the procedures she implemented to handle Chapter 91 requests and produced a copy of the Chapter 91 response which had her hand written note “mailed w/rent roll 9/24/10.”  Although she admitted that she did not have a specific recollection of completing or mailing the form, “she testified that she would have followed all of the above procedures as to the handling of the Chapter 91 request.”
 

The municipality argued that without a specific recollection of completing and mailing the Chapter 91 response, the property owner cannot take advantage of the “presumption of receipt” arising under New Jersey case law. In addition, the municipality argued that vague testimony would lower the standard for other property owners who could merely argue “the check is in the mail” and avoid having its complaint dismissed. The court disagreed with the municipality and denied the motion.
 

It is important to note that the court’s decision turned on the credibility of the witness and the corroborating evidence produced at the hearing. It is not enough for a property owner to allege “I believed I mailed it”, or “since I responded every  year, I believe I responded this year”, without providing a thorough description of the procedures implemented to handle Chapter 91 requests and producing documentation that supports the testimony. Prudent property owners should adopt specific procedures for responding to Chapter 91 requests, including:

1. stamping the request with the date it is received;
2. having the information assembled immediately for a timely response;
3. mailing the response by certified mail; and
4. keeping a copy of the response with some record of when it was mailed

Is there an exception to this rule? Yes, but it is very limited.

 

The New Jersey Tax Court can “relax the tax payment requirement and fix such terms of payments as the interests of justice may require.”  N.J.S.A. 54:51A-1(b).  Recently, the New Jersey Tax Court reviewed a case where a property owner asked the court to relax the payment requirement because the municipality was partially to blame for the financial problems arising from the development of the property being appealed.  Evans-Francis Estates Associates, LP v. Township of Cherry Hill, Docket No. 012386-2011, New Jersey Tax Court, Nov. 9, 2011.   The owner alleged the municipality’s reluctance to allow affordable housing units to be constructed on the property contributed to the financing obstacles.  However, the owner conceded that the collapse in the tax credit equity market contributed to delays in starting construction.

 

The Court applied the following three part test when reviewing the request to relax the tax payment requirement:

At a minimum, it would seem that such circumstances must be (1) beyond the control of the property owner, not self-imposed, (2) unatributted to poor judgment, a bad investment or a failed business venture, and (3) reasonably unforseable.
 

The Court found the property owner failed to meet any part of the test because the “obstacles encountered by the plaintiff in securing the approvals and financing necessary to construct its project are commonplace and reasonably foreseeable.”   The Court was not persuaded that the municipality’s conduct was a mitigating factor or that the severe economic times excuse the obligation to pay property taxes.
 

The case demonstrates the challenges facing property owners in these tough economic times when it comes to appealing a distressed property. To appeal, a property owner must find a way to be current through the first quarter of the year or risk having its appeal dismissed, good times or bad. 

The drive by commercial establishments and property owners to offset conventional power sources with solar energy certainly comports with current State and federal energy policies.  However, the construction and operation of a solar energy facility may involve a myriad of legal issues for which the advice and counsel of a knowledgeable attorney is essential.
 

Broadly speaking, businesses and individuals interested in hosting a solar energy facility on their premises may do so either by purchasing the solar panels and related equipment outright from a solar developer pursuant to an engineering, procurement and construction contract (EPC) or by leasing the facility long-term (usually 15 to 20 years) pursuant to a power purchase agreement (PPA).  Under both types of agreements, the solar developer may offer to design, build and maintain the solar facility.
 

One threshold matter that applies equally to EPC and PPA contracts is whether to obtain a solar feasibility study for the subject property and the proposed system equipment from an independent technical professional in consultation with an attorney. A solar developer will often perform a property and equipment analysis prior to installing the facility. However, the solar developer’s feasibility study may not include everything that a commercial enterprise or property owner may want to know before committing to the purchase or rental of a solar energy facility. For example, in order for a solar energy facility to operate efficiently and productively the owner or lessee of the system may need to prune or remove trees on site or may need to secure a solar easement from a neighboring property owner to restrict the location and/or height of a building addition, landscaping or other improvements (which might otherwise block access to sunlight).
 

A solar feasibility study should also gauge whether the proposed system size will adequately serve current energy needs (as well as any anticipated change thereto that might occur in the future) and whether the roof of the existing building where the proposed facility is to be constructed and all other structural components and the electrical system can handle the load of the proposed facility. In this regard, by way of further due diligence following receipt of a solar feasibility study, a prospective owner or lessee of a solar energy system should (1) verify with its insurance agent that the proposed facility will not require an insurance upgrade; and (2) contact all companies that have supplied warranties for the roof or other building components that the proposed facility will not require any special inspections to avoid invalidation of any such warranties.
 

Another consideration integral to both EPC and PPA contracts is the procurement of land development approvals and permits for the solar installation.  Indeed, it should not be assumed that the solar developer will obtain any required land development approvals, such as site plan or variance relief (although often they will secure the building permit) or that any failure to acquire such approvals will operate to terminate an agreement with a solar developer.  Therefore, during contract negotiations, a prospective purchaser or lessee should discuss with the solar developer and resolve such matters as which party will be responsible to make application and pay for approvals or permits and whether a failure to obtain any such approvals or permits after making a good faith effort shall operate to terminate the contract.
 

The foregoing represents just a handful of the issues that may come into play when considering whether to install and operate a solar energy system.  If you are interested in learning more about EPC or PPA contracts or have a legal issue relating to solar installations that you would like to discuss, do not hesitate to contact Vincent J. Mangini, Shareholder and LEED Accredited Professional BD+C, here in our Lawrenceville, New Jersey office.

Mr. Onder and Mr. Kvitka state that generally, mall owners may impose restrictions against commercial solicitations and restrictions on the place, time and manner of noncommercial speech activities. However, any commercial restriction should be less onerous than the restrictions noted in the cases cited. Additionally, a mall owner should not adopt any such restrictions unless it can justify that each requirement is necessary in order to protect the mall owner’s commercial interests.
 

Following are some quick tips for dealing with insurance issues:

• Review Your Policy. Before you do anything else, make sure you have a complete, current copy of your policy(s) and review them to get an understanding of what insurance coverage you have. For example, what are the policy limits? Are their endorsements pertaining to a “hurricane” loss? What are your deductible limits?
• Review and Categorize Your Loss. The differences in loss and coverage for commercial landlords and tenants can vary greatly. For instance, you may not have suffered any flooding or damages due to the wind and rain, yet you may have had a shutdown in your business due to protracted power outages. It is important to review your policy and characterize your total loss. A restaurant’s loss could include spoiled food or perishable inventory, for example. A clothing retailer’s loss may be the number of days the store remained closed due to power loss or other localized damage.
• How Does Your Insurance Policy Characterize the Loss? The precise language of your policy will determine whether you can recover for your losses, and in what amount. In a very recent development following the hurricane, the New Jersey Commissioner of Banking and Insurance has ruled that hurricane Irene did not generate sustained hurricane – force winds of above 74 mph as it hit New Jersey, (apparently the wind was measured at a peak velocity of 71 mph) and, accordingly, losses should not be characterized by insurance adjusters as having been caused by a “hurricane.” This has tremendous significance in connection with how losses are adjusted in New Jersey since many policies have very high deductibles for losses caused by wind and other damage associated with a hurricane.

This is good news for policyholders and should result in many more claims falling within coverage, within otherwise applicable policies. You should be aware, however, that many policies may not cover losses attributable to “flood” or related water damage driven claims. 

This is all the more reason you need to examine your policy carefully, in consultation with your insurance agent or broker, and to seek legal assistance if the insurance carrier is not recognizing your claim in full, or is citing exclusions or other policy language inconsistent with your good-faith reading of the policy. These issues can be tricky, especially for most people who are unfamiliar with the nuances of insurance coverage, and examine their policies carefully only after a significant loss. 

These are just a few of the issues commercial landlords and tenants will be dealing with over the next few months due to Hurricane Irene. Regardless of what insurance or other legal issues you face, Stark & Stark’s Commercial Landlord & Tenant, and Insurance Coverage Groups are available to assist you. Feel free to contact Tom Onder, Tom Pryor or Tara Speer in our Lawrenceville, New Jersey office, regarding these issues. 

What is NJR Clean Energy Ventures? from Stark & Stark on Vimeo.

The League is the lobbying arm of New Jersey’s municipalities and is supported in large part from public funding in the form of membership dues. Additionally, its employees participate in the Public Employees’ Retirement System, after The League was declared a public agency for that purpose by a 1955 Attorney General Opinion. Given that the lobbying done by The League on behalf of municipalities throughout the state of New Jersey, which until now the documentation for was private, one would expect a treasure-trove of information to become available to those seeking to challenge the lobbying and other efforts of The League in the future. 

In this instance, Fair Share Housing was seeking information regarding the League’s position opposing affordable housing regulations proposed by the New Jersey Council on Affordable Housing (COAH). Therefore, all COAH regulations adopted in the past 10 years have been declared unconstitutional. The latest regulations are on appeal before the New Jersey Supreme Court challenging the latest determination of unconstitutionality. The League has largely been supportive of these unconstitutional regulations and has opposed reasonable attempts at legislation and regulations enforcing a municipality’s obligations to zone for reasonable opportunity for housing for all of the residents of New Jersey.

Here in my firm's Lawrenceville, New Jersey office, I expect this decision to be a source of conversation among our attorneys. If you have questions about how this decision could impact you and your business, feel free to contact me to discuss this matter in more detail.

Developers, property owners, architects, engineers and frankly all of us are to be thankful for building code requirements that consider earthquakes as an element of structural design, not only here in New Jersey, but throughout the entire nation. 

While structural design and building codes in California for instance must pay far more attention to the possibility and severity of earthquakes, all building codes are required to consider the impact of natural events (including wind and earthquakes) no matter how uncommon such natural events might be. Without such building code requirements, there could have been far more damage than the building shaking and buzz around the office we felt here in New Jersey.

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How Does Solar Energy Production Work? from Stark & Stark on Vimeo.

Perhaps the most important factor to consider is the location of the leased premises, which will invariably dictate whether the lease is long term or short term. If the location is favorable for a particular type of business, a business owner may still be hesitant to enter into a long term lease. As an alternative, the tenant can negotiate a renewal option, which would give the tenant the option to renew the lease agreement for a specific term by providing notice to the landlord of the intent to exercise the option prior to the end of the initial lease term.

A renewal option may provide a tenant with leverage upon the renewal that is not otherwise available during the initial negotiation of a lease, particularly if the tenant has proven that it is a viable operation that will be a good long term tenant. Landlords are going to be more willing to make concessions for a good tenant.

The terms of the renewal may be laid out in advance in the initial lease, and the renewal may call for an increase in rental based on the Consumer Price Index, a percentage of the rent, or fair market value of the premises. If the parties use the fair market value, or a percentage thereof, then the method of determining the fair market value should be drafted into the initial lease. This will avoid an unnecessary dispute at the time of renewal. In addition, the timing, who hires the appraiser, and who pays for the appraiser should be specified in the initial lease. It is also advisable to include what factors may be considered in the appraisal. For example, a tenant should seek to exclude its installations and fixtures that are to be removed at the end of the lease term from being considered in the appraisal.

When carefully drafted, a renewal option can provide a tenant with flexibility, rather than putting the tenant in a position where the business is incurring the financial risk of a long term lease during uncertain economic times. Moreover, landlords are typically willing to include a renewal option in a lease, and the renewal may provide the tenant with a method to renegotiate more favorable lease terms.

Rowan University’s appraiser initially valued the property at $2.8 million, however, nine months after the complaint was filed, Rowan attempted to reduce its offer to $2.35 million. Prior to the start of trial, Mr. Duggan was successful in having the new appraisal stricken, which resulted in Rowan University being forced to rely upon its initial appraisal of $2.8 million.
 

The property owner’s appraiser opined to a value of $4,580,000. The jury listened to the testimony of four experts (two appraisers and two architects), and several fact witnesses, and rendered a verdict of $4,450,000.