New Jersey, like many other states, allows for the cultivation and sale of marijuana for medicinal purposes. Marijuana is not yet allowed for recreational use in New Jersey. While medical marijuana use and consumption is legal under New Jersey state law, it remains illegal under Federal law, which leads to an interesting and complicated situation when an applicant seeks zoning approvals for a marijuana facility. Planning and/or Zoning Boards are essentially asked to approve a use that is illegal under Federal law.
One of the questions that I am frequently asked is, “Who can develop property in a redevelopment area?”
As discussed below, redevelopment can be done by anyone, subject to restrictions discussed below, and is not necessarily restricted to just large scale developers.
A redeveloper is defined by New Jersey’s Local Housing and Redevelopment Law (the “LHRL”) as “… any person, firm, corporation, or public body that shall enter into or propose to enter into a contract with a municipality or other redevelopment entity for the redevelopment or rehabilitation of an area in need of redevelopment…”.
Thus, for a redeveloper to make use of the LHRL, a municipality must have first declared a property or properties as an area in need of redevelopment.
Just before the end of 2014, Governor Christie signed legislation that extended the time periods contained in the New Jersey Permit Extension Act. The Permit Extension Act deals with various land use approvals and permits that were either approved and/or set to expire after January 1, 2007.
The purpose of the Permit Extension Act was to acknowledge the difficult economic climate and to toll the expiration dates for the covered permits and/or approvals. Without the Permit Extension Act, many developers who were unable to move forward with their projects, were conceivably going to have their approvals/permits lapse. This would force developers to through the costly and time consuming process of reapplying and obtaining various permits and approvals under the current statutory regulations, or perhaps simply not be able to re-obtain the lapsed approvals.
Previously the Permit Extension Act ensured that the covered approvals/permits would not lapse prior to December 31, 2014. Pursuant to the recent legislation, that date has now been extended through at least December 31, 2015
However, it is important to note that not every permit or approval obtained or set to expire after January 1, 2007 is covered by the Permit Extension Act. The approvals may extend up to an additional six months for any unexpired term of the approval or permit, thus not later than June 30, 2016, Moreover, further extensions as permitted by law are not precluded when the tolling period expires.
To ensure your project’s success and that all land use issues are dealt with effectively and efficiently, contact Stark & Stark’s Commercial, Retail and Industrial Real Estate Group. Attorneys are active members of the International Council of Shopping Centers (ICSC).
The case of Advance at Branchburg II, LLC V. Township of Branchburg Board of Adjustment, (N.J. Super. Ct. App. Div. 2013) dealt with the issue of whether a residential development could be treated as an inherently beneficial use when only approximately 20% of the development was utilized for affordable housing. The developer was seeking a d (1) use variance for a multi- family residential development consisting of 292 units, of which 59 would be affordable housing units. The developer argued that the inclusion of the affordable housing component rendered the entire development an inherently beneficial use.
Applicants have an easier standard in use variance cases if the proposed use is deemed inherently beneficial. A use that is deemed inherently beneficial presumptively satisfies the positive criteria, while no such presumption exists for a use that is not inherently beneficial.
The Court noted that affordable housing is an inherently beneficial use. However, in this instance, the developer was proposing to include affordable housing units to a development in which approximately 80% of the units are market rate units. The developer argued that the market rate units are inherently beneficial as they support the affordable housing units. In other words, the ability to build the affordable housing units is contingent on being able to construct the market rate units.
While the Court acknowledged that market rate units are needed to develop affordable housing, the Court refused to deem the entire project as one involving an inherently beneficial use. The Court stated that the developer does not have to build a large predominantly market rate development requiring a use variance in order to finance the construction of the 59 affordable housing units. The Court refused to allow the inclusion of the affordable housing units to transform a predominantly market rate residential project into an inherently beneficial use.
This case is illustrative in showing how a Court determines the appropriate standard in a use variance case when there is an inherently beneficial component, but the project’s predominant use is not inherently beneficial.
The case of Ginsburg Development Companies, L.L.C v. Township of Harrison stands for the proposition that a developer can be responsible for the cost of off-site improvements that are made prior to the construction of the proposed development. This is an unpublished opinion decided by the Superior Court of New Jersey, Appellate Division.
In 2005, the Planning Board of Harrison Township (“Board”) granted final major subdivision approval to Ginsburg Development Companies, L.L.C (“Ginsburg”) for the construction of 77 single family homes. The approval was contingent on Ginsburg obtaining water treatment works approval from the New Jersey Department of Environmental Protection, a NJDEP-TWA permit. This permit could not be obtained without Harrison Township (“Township”) certifying that the existing sanitary sewer could accommodate Ginsburg’s project.
The Township’s sewer system was inadequate to accommodate Ginsburg’s development. A Developer’s Agreement between Ginsburg and the Township was executed in November 2005 in which the Township agreed to provide the certification and sewer service to Ginsburg’s development, provided that Ginsburg make a contribution to the off- site sanitary sewer improvements. The parties reached an agreement as to Ginsburg’s pro rata share of the improvements.
Pursuant to the Developer’s Agreement, Ginsburg agreed to make payment within thirty days of the Township’s written notice indicating the price of the improvements. The Township proceeded to make the necessary improvements to its sewer system and sought reimbursement from Ginsburg pursuant to the Developer’s Agreement.
Ginsburg took the position that it was not required to make any payment for the improvements until it commenced development of its project. Ginsburg tried to cite the cases of River Vale Planning Board v. E & R Office Interiors, Inc., 241 N.J Super 391, 575 A.2d 55 (App. Div. 1990) and Toll Brothers, Inc. v. Board of Chosen Freeholders, 194 N.J. 223, 944 A.2d 1 (2008) for the proposition that “conditions of land use approvals are only enforceable when the developer actually proceeds with the project.” The Court held that Ginsburg’s interpretation of those cases is too broad and also distinguished those cases.
The Court noted that the resolution granting Ginsburg’s approval remained valid and Ginsburg intended to develop the property. Ginsburg did not seek to modify the conditions of its approval, allege that there were changed circumstances or allege that the percentage that it was assessed for the improvements exceeded its pro rata share of the completed work. Ginsburg merely stated that it had not yet commenced to develop the property. The Court found nothing unfair about having Ginsburg make payment pursuant to the terms of the Developer’s Agreement even though it had yet to commence construction.
As illustrated by this case, it is imperative that developers be careful about the wording in Developer’s Agreements and understand their commitments under these agreements.
Eric Goldberg is a shareholder in Stark & Stark’s Real Estate and Franchise Groups. If you have any questions or need additional information, please contact Mr. Goldberg at (609) 791-7013 or firstname.lastname@example.org.