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

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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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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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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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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On October 9, 2009, the New York State Legislature enacted the Green Jobs-Green New York Act of 2009 (“Green Jobs Act”) as P.L. 2009, ch. 487, amending the Public Authorities Law, to create the Green Jobs-Green New York Energy Conservation and Community Sustainability Program (“Green Jobs-Green New York Program”).  Under this new program, the New York State Energy and Development Authority (“Authority”) is empowered to award financial assistance from the Green Jobs-Green New York Revolving Loan Fund to applicants for the conduct of energy audits and the performance of qualified energy efficiency services on non-residential, residential and multi-family structures.  The Green Jobs Act defines “applicant” broadly to include any “person who owns, leases or manages a structure and who has the authority to contract for the provision of qualified energy efficiency services to such structure.” NY PUB AUTH § 1891.  However, loans for “qualified energy efficiency services,” which are also defined under the Green Jobs Act and include such building improvements as thermostat upgrades and the installation of thermal solar heat or hot water systems, are limited.  For example, loans for approved qualified energy efficiency services may not exceed $26,000.00 per applicant for non-residential structures.  Applicants applying for financial assistance relating to residential structures may only receive up to half that amount.  The cost of the energy audit may be added to the amount of the loan.  Interest rates shall lie within the Authority’s discretion, but may “be no higher than necessary to make the provision of the qualified energy efficiency services feasible.” NY PUB AUTH § 1896.
 

In addition to the provision of loans for energy audits and qualified energy efficiency services, the Green Jobs-Green New York Program requires the Authority to award grants for certain purposes and to promote employment and training services.  In the way of funding, the New York State Legislature has appropriated $112,000,000 to finance the aforesaid loan program and the Authority’s other activities.  The Authority is not expected to begin implementing the Green Jobs-Green New York Program until the spring of 2010.

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On November 20, 2009, Governor Jon S. Corzine signed into law Senate Bill S1303 as P.L. 2009, ch. 146, which codifies the term “inherently beneficial use,” a concept originally fashioned by the Supreme Court in Andrews v. Ocean Township Bd. of Adjustment, 30 N.J. 245 (1959) and, thereafter, expanded and refined by the judiciary over many years.  The new law, which amends Section 3.1 of the Municipal Land Use Law (L.1975, c.291, C.40:55D-4), defines inherently beneficial use to include, among other things, “a wind, solar or photovoltaic energy facility or structure.”  This will undoubtedly make it easier to obtain approvals for and install these alternative energy facilities where they are not permitted under local zoning regulations and require a use variance.  However, the text of the amendment presents a number of issues of which property owners, developers and others should be aware.
 

First, strangely missing from the new statutory definition of inherently beneficial use is any mention of religious institutions, affordable housing or certain other uses that have been long recognized as being inherently beneficial.  Although the list of uses contained in the definition is expressly stated not to be exhaustive, the omission of uses traditionally viewed as being inherently beneficial is troubling and could open the door to a reexamination of their value and purpose by municipal agencies and the courts.  Additionally, it is unclear whether the term “wind, solar or photovoltaic energy facility or structure” refers only to stand-alone facilities or to facilities that are accessory to (and situated on the same site as) other uses or structures, as well.  It also remains to be seen whether a wind, solar or photovoltaic energy facility that is connected to the grid and supplies excess energy to off-site users qualifies as inherently beneficial.

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Under N.J.S.A. 40:55D-21, if a developer is “barred or prevented, directly or indirectly,” from moving forward with an approval obtained pursuant to the Municipal Land Use Law (MLUL) “during the period of approval” on account of the institution of “a legal action” or the issuance of “a directive or order” by, among other government actors, a “political subdivision” for the purpose of “protect[ing] the public health or welfare” at a time when “the developer is otherwise ready, able and willing to proceed[,]” then - in such instance - the period of approval shall be suspended for so long as “said legal action is pending or such directive or order is in effect.”

Recently, in the matter of Friends of Peapack-Gladstone v. Borough of Peapack-Gladstone Land Use Board, et al., the Appellate Division of the New Jersey Superior Court interpreted this provision of the MLUL and decided, among other things, that the running of the period of approval for 18 golf cottages was tolled when a zoning officer declined to issue a building permit for the construction of the second such cottage, “because of his perception that the project was being advertised in a manner contrary to the Board’s prior approvals.”  In the Court’s view, the zoning officer was “plainly” acting as an agent of the Borough, a political subdivision, in rendering this decision which, according to the Court, “was manifestly an effort on his part . . . to ‘protect the public health and welfare’ in the Borough [and] . . . had the direct and indirect effect of halting the developer’s work on the project, at a time at which the developer was evidently ‘ready, willing and able to proceed’ with the building of the next dwelling.”

The Appellate Division’s decision in Friends of Peapack-Gladstone v. Borough of Peapack-Gladstone Land Use Board, et al. may be viewed on WestLaw at 2009 WL 1643315 (N.J.Super. A.D.) and has been approved for publication.

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Recently, in the matter of Schmidhausler v. Planning Board of Borough of Lake Como, the Appellate Division of the New Jersey Superior Court addressed, among other issues, what the remedy for an aggrieved party should be when a municipal board renders a decision on an application for development under the Municipal Land Use Law that is tainted by the failure of one of its members to read or listen to the testimony presented on the matter during a prior meeting in violation of N.J.S.A. 40:55D-10.2.  In this case, the planning board voted to approve an application for a subdivision with variance relief by a narrow one-vote margin.  The plaintiffs argued that the remedy in such instance should be the striking of the disobedient board member’s vote.  The Appellate Division, however, was not persuaded by plaintiffs’ suggestion, especially here, where such action “would result in a tie vote and . . . an automatic denial of the application.”  Instead, the Court opted to remand the matter to the planning board for another round of deliberation and a new vote after “those who had not attended one or all of the hearings in this matter review the transcript of any meeting or meetings that they may have missed[ and] certify they have done so[.]” According to the Court, this course of action was preferable to “denying the application outright or putting all of the parties to the cost and expense of an entire new hearing[.]”

By this case, the Appellate Division has provided a clear message to all parties involved in the prosecution and disposition of applications for development under the MLUL that a failure on the part of municipal board members to abide by N.J.S.A. 40:55D-10.2 - while not triggering a new hearing - will likely cause the board’s decision to be deliberated and voted on anew.  The Appellate Division’s decision in Schmidhausler v. Planning Board of Borough of Lake Como may be viewed on WestLaw at 2009 WL 1491306 (N.J.Super. A.D.) and has been approved for publication.

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Although municipal boards are not bound by the strict rules of evidence during the conduct of proceedings, their findings and determinations must be based upon substantial credible evidence created in the record. This applies when a municipal board acts in a quasi-judicial capacity during the review of applications for development under the Municipal Land Use Law, N.J.S.A. 40:55D-1, et seq. (“MLUL”), and when a municipal board (specifically, a planning board) acts in a quasi-legislative capacity during a preliminary investigation into whether certain properties are in need of redevelopment pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq. (“LRHL”).

In order to meet the substantial evidence standard an adequate record must exist. This requires a verbatim recording of the proceedings. The MLUL expressly requires that “[t]he municipal agency shall provide for the verbatim recording of the proceedings by either stenographer, mechanical or electronic means.” N.J.S.A. 40:55D-10f. Although there is no comparable provision in the LRHL, the Appellate Division in Concerned Citizens v. Mayor implied that the minimum procedures required for hearings on applications set forth in the MLUL applies equally to the conduct of proceedings by municipal agencies under the LRHL. 370 N.J.Super. 429, 463 certif. denied 182 N.J . 139 (2004). The application of the MLUL in this regard is reasonable in light of the importance a written record plays in memorializing issues, concerns and policy considerations that were relevant when the municipal board made its determination. A written record of proceedings also provides the judiciary with a basis for evaluating the validity of a determination when it is challenged on appeal.

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