Real Property & Environmental Law Alert

"From Ink to Occupancy" Real Estate Program at Gibbons P.C. Armed Attendees with Fundamentals & Information on the Latest Trends

Gibbons P.C. — Mon, 20 May 2013 09:58:21 -0500

“From Ink to Occupancy, A Game Plan for a Successful Real Estate Project,” the latest installation of the Gibbons Women’s Initiative Seminar Series, was held earlier last week and attracted a great crowd, including real estate professionals and in-house counsel. Nancy A. Lottinville, Jennifer M. Porter and Ivette P. Alvarado guided attendees through the nuts and bolts of a commercial real estate contract, due diligence and the land use approvals process, with a focus on New Jersey and New York. A portion of the program was also dedicated to the current “Hot Topics” of real estate in New Jersey and New York, including FEMA’s Advisory Base Flood Elevations and cross-access easement issues. Thanks to various requests from attendees for more information, the RPE Law Alert will be posting blogs over the course of the next few weeks expanding on the topics covered during the program. Watch for the next installation: “Properly Identifying the Property in the Contract: Are You Sure You Know What You’re Getting?”

*Photo courtesy of Alphaspirit, Dreamstine.

New York State Comptroller Sets Forth Options for Revitalizing State's Brownfield Cleanup Programs

David J. Freeman — Mon, 13 May 2013 08:41:33 -0500

Late last month, New York State's Comptroller, Thomas P. DiNapoli, issued a report reviewing options for modifying the way the state incentivizes and administers cleanups of its thousands of remaining brownfield sites. The Report has special significance in light of Mr. DiNapoli's expertise in this area: he is a former Chair of the State Assembly's Environmental Conservation Committee and one of the architects of the state’s Brownfield Cleanup Act, passed in 2003.

The urgency of updating the Act is accelerating with every month. The Act’s tax credits--which, for many participants, are the most powerful incentives to enroll a site in the state’s Brownfield Cleanup Program (BCP)--expire as of December 31, 2015 for all sites which have not received their Certification Of Completion (COC) by that date. It generally takes two to three years from enrollment in the BCP to receipt of a COC. Accordingly, sites entering the BCP now are increasingly at risk of not obtaining their COCs prior to the sunsetting of these tax credits.

As Mr. DiNapoli acknowledges, his review builds on the recommendations of other commentators, including the New York State Bar Association Environmental Section's Brownfield Task Force. The options evaluated in the Report include:

Extending or removing the sunset date for expiration of tax credits for sites currently enrolled in the BCP.
Maintaining broad eligibility for entry into the BCP and for qualifying for the tax credits for cleanup costs. As-of-right credits for such costs range from 22% to 50%, depending on the extent of cleanup and the anticipated site use. The tax credits are refundable--i.e., to the extent they exceed the tax obligation of the qualifying entity, that entity receives a refund check from the state.
Enhancing state funding for Phase I and Phase II site assessments, which are currently not eligible for tax credit treatment when performed prior to a site’s being enrolled in the BCP.
Imposing additional requirements for sites to qualify for tax credits for build-out expenses (i.e., the “above-ground” costs of developing the site). At present, these credits are as-of-right for all sites accepted into the BCP and range from 10% to 22%, subject to caps based on the amount of cleanup costs expended and an overall per site dollar limit. Under one option evaluated by the Report, sites would henceforth have to show a special need for development credits based on site conditions and/or economic circumstances.
Authorizing a new Voluntary Cleanup Program that, like the BCP, would provide state oversight and liability protection, but would do so with more streamlined procedures and without offering tax credits.
Enhancing funding for the state’s two other cleanup programs, the Environmental Restoration Program (whose available funds are fully obligated) and the State Superfund Program.
Reducing administrative burdens by modifying the extensive public participation requirements under the BCP and/or by reducing or eliminating state oversight fees.
Partnering with municipalities by allowing those with sufficient technical capacity to run their own brownfield cleanup programs, as New York City is currently doing under a Memorandum of Agreement with the state.
Providing authority for enforcing the obligation of tax credit recipients to file reports required under the BCP.
Enhancing the state’s database of brownfield sites.

The Report is careful not to choose among the various options reviewed. But, Mr. DiNapoli’s selection of issues to highlight is significant, especially given his expertise in this area and his personal relationships with key players in the Legislature and the Governor’s office. Because of this, and because it skillfully draws on the recommendations of other knowledgeable commentors, the Report will no doubt be influential in the continuing debate on how to revitalize efforts to clean up New York State’s brownfields.

David J. Freeman is a Director in the Gibbons Real Property & Environmental Department.

In Clean Water Act Case, Three Justices Invite Future Challenge to Rule of Deference to Agencies in Interpretation of Their Own Regulations

Paul M. Hauge — Wed, 08 May 2013 11:19:49 -0500

A victory in the Supreme Court is generally welcome news for the U.S. Environmental Protection Agency (EPA). But, the Court’s decision last month in a Clean Water Act case may foreshadow a sweeping change in administrative law that would certainly not please EPA or other agencies: the end of a long-standing rule of judicial deference to agencies in the interpretation of their own regulations.

It is well established that when they interpret statutes, federal agencies are accorded substantial deference, such that a court must uphold an agency’s reading of an ambiguous statute as long as it is a plausible, reasonable reading. This is known as Chevron deference.

The Court has long applied the same rule when agencies interpret their own regulations. Beginning with Seminole Rock in 1945, the Court laid down the rule that an agency’s interpretation controls, even it is not the best or most natural reading, as long as it is not “plainly erroneous or inconsistent with the regulation.” This is often called Auer deference, after the 1997 case that reaffirmed the principle.

A seed of doubt about the continued viability of Auer deference was planted in the Court’s recent decision in Decker v. Northwest Environmental Defense Center. At issue was whether the Clean Water Act required a permit for stormwater discharges from some logging roads in Oregon. The statute requires a permit for any discharge from a “point source,” but exempts from the permit requirement most “discharges composed entirely of stormwater.” That exemption does not apply, however, to stormwater discharges “associated with industrial activity.”

EPA promulgated detailed regulations to implement the statutory language. Its regulatory definition of a “silvicultural point source” clearly included logging activities, but what about the statutory exemption for many stormwater discharges? And what about the “exception to the exemption” for stormwater discharges associated with industrial activity?

EPA’s stormwater rule said that a discharge was “associated with industrial activity” when it was “directly related to manufacturing, processing or raw materials storage areas at an industrial plant.” The rule also specified that facilities covered by the Standard Industrial Classification that included logging activities would be considered as engaging in industrial activity. But despite the inclusion of logging activities in that classification, the agency read its stormwater rule as covering only “traditional industrial sources such as sawmills.” It pointed to the rule’s references to “facilities” and “industrial plant[s]” in support of its interpretation of the rule as excluding stormwater discharges from logging activities. The Court, citing Auer, upheld EPA’s reading of its regulation as a permissible one, neither plainly erroneous nor inconsistent with the regulation.

In a lone dissent, Justice Scalia disagreed with EPA’s reading of its regulation, and, more significantly, openly called for an end to Auer deference. Ironically, Justice Scalia himself authored the opinion (for a unanimous Court) in Auer.

The reasons for Chevron deference, said Justice Scalia -- an implied grant of discretion from Congress when it enacts an ambiguous statute, and the pragmatic benefit of avoiding prolonged periods of uncertainty over the statute’s meaning if Congress failed to act quickly to eliminate the ambiguity -- do not support Auer deference. There is no grounds for presuming that Congress impliedly granted the agency the power to resolve ambiguities in its own regulations, especially where it would place the power to write a law and the power to interpret it in the same hands, thus violating “a fundamental principle of separation of powers.” “Auer is not a logical corollary to Chevron,” said Justice Scalia, “but a dangerous permission slip for the arrogation of power” and an invitation to write vague regulations that can later be interpreted in any number of plausible ways. And an agency need not wait for Congress to clarify an ambiguous regulation -- it can do so itself. Indeed, in the case before the Court, EPA had done just that, amending its regulation, three days before oral argument, to clarify that the stormwater rule did not cover logging activities. (Given its holding on the “old” rule, the Court did not need to decide whether the original rule or the amended rule applied.) As for the argument that an agency would have some special insight into the meaning of its own regulations, Justice Scalia dismissed it for the same reason he is notoriously suspicious of legislative history -- because with both statutes and regulations, “we are bound by what they say, not by the unexpressed intention of those who made them.” Finally, while the special technical expertise of agencies might be a good reason for having agencies (and not courts) make regulations, it does not give agencies any special advantage in interpreting a rule that has already been promulgated -- the core judicial function to “say what the law is.”

Justice Scalia’s dissent did not attract the votes of any of the other Justices, but in a concurring opinion, joined by Justice Alito, Chief Justice Roberts signaled that he might be prepared to reconsider the principle set forth in Auer “in an appropriate case,” that is, one “in which the issue is properly raised and argued.” Noting that the issue is “a basic one going to the heart of administrative law” that comes before the Court “as a matter of course on a regular basis,” the Chief Justice invited future challenges, as “[t]he bar is now aware that there is some interest in reconsidering” Seminole Rock and Auer. With at least three votes for granting certiorari on the issue, we can anticipate an explicit call to overturn Auer in the near future.

Paul M. Hauge is an Associate in the Gibbons Real Property & Environmental Department.

May I Come In?: N.J. Supreme Court Approves Warrantless DEP Searches of Residential Property Subject to Freshwater Wetlands Permit

Paul M. Hauge — Mon, 06 May 2013 15:55:56 -0500

In a unanimous decision that was at once sweeping and limited, the New Jersey Supreme Court held that the Department of Environmental Protection (DEP) need not obtain a warrant before entering a residential parcel to ensure compliance with the terms of a wetlands permit. The Court stopped short of a blanket validation of all warrantless searches under the wetlands statute, or of all warrantless searches of residential property subject to any sort of permit, instead grounding its holding in the protections afforded by the process that DEP must follow, and limiting it to searches of properties that are subject to a wetlands permit.

The case concerned the property of Robert and Michelle Huber. The parcel was subject to a permit issued to the developer of the property in 1992 under the Freshwater Wetlands Protection Act (FWPA). A deed restriction referring to the permit was recorded when the developer sold the property in 1994. The property was sold once again, in 1997, before the Hubers acquired it in 1999. Their title report also referred to the permit.

In 2002, after complaints from a neighbor about the placement of fill and the mowing of vegetation in restricted portions of the Hubers’ land, DEP sent an inspector to the property. The parties disputed whether he received permission to enter the property, but he did in fact enter and collected evidence of violations. Subsequent inspections, aerial photographs, and the Hubers’ own admissions eventually established clear evidence of permit violations. DEP assessed a civil penalty and ordered the Hubers to submit a restoration plan. An administrative law judge, the DEP Commissioner, and the Appellate Division all upheld the DEP order.

Before the Appellate Division, the Hubers argued, for the first time, that the evidence from the first DEP inspection should have been excluded because the inspector lacked a warrant, as required by the federal and state constitutions. The Appellate Division rejected that argument, holding that the reasoning of the U.S. Supreme Court’s 1987 decision in New York v. Burger, which permitted warrantless administrative searches of commercial property in closely regulated industries, should be extended to residential properties like the Hubers’ parcel.

The New Jersey Supreme Court at first denied certification, but then the case took an unusual turn. After the denial of certification, the Hubers filed a petition for certiorari with the U.S. Supreme Court. The denial of the petition was accompanied by a statement from Justice Alito (joined by Chief Justice Roberts and Justices Scalia and Thomas) that questioned whether Burger could be applied to residential property. Seizing on this statement, the Hubers sought reconsideration, and the New Jersey Supreme Court granted certification.

Answering Justice Alito’s question, the Court first rejected the Appellate Division’s extension of Burger outside of the setting of a commercial property in a closely regulated industry. The Court contrasted the “heightened privacy interests that are associated with a private, residential property” with the lesser privacy interests in a commercial setting, especially one where highly regulated activity occurs.

“The FWPA’s inspection scheme cannot fairly be viewed as unreasonable as applied to a residential homeowner whose property is subject to a FWPA permit because, by seeking its permission to disturb land on or near otherwise statutorily protected wetlands, a landowner and his or her successors in title are bound to compliance with the permit. That includes compliance with the permitting scheme’s mechanism that authorizes reasonable entry onto land affected by the permit to ensure that these valuable natural resources are maintained as required by the conditions of the permit.”

A separate line of cases, however, provided a rationale for upholding DEP’s warrantless search of the Hubers’ property. In cases decided in 1970 and in 1978, the U.S. Supreme Court had “signaled,” without so holding, “that a legislative determination to establish standards for reasonableness for searches and seizures can receive favored treatment where that process does not include ‘forcible entries without a warrant.’” Analyzing the details of the wetlands statute and DEP’s implementing regulations, the Court found that the process that DEP is required to follow in seeking to enter the property of a permit holder-- from the inspector’s presentation of credentials, to issuance of an order if access is refused despite the permittee’s statutory duty to allow entry, to a judicial action to enforce such an order -- satisfied the criteria suggested by the U.S. Supreme Court. The process avoids a forcible, nonconsensual entry into a residential property. More generally, said the Court, the inspection scheme is reasonable when applied to a homeowner whose property is subject to a permit because, by seeking permission to disturb lands protected by the statute, the homeowner (as well as his or her successors in title) are bound to compliance with terms of the permit, including the requirement to allow reasonable entry.

The question, then, is not so much whether DEP can gain entry -- the statute virtually guarantees it -- but how DEP can gain access if the permit holder refuses. The Court concluded that the process established by the statute and regulations was sufficiently protective of the homeowner’s expectation of privacy. That expectation is reduced where, as in the Hubers’ case, the homeowner acquires the property subject to a recorded deed restriction that explicitly referred to a permit that, in turn, gave DEP the right to access. “Put simply,” the Court concluded, “the rights of the FWPA permittee are subject to the statutory scheme by which the permit operates, and that includes submitting to a reasonable inspection scheme.”

The Court was careful, however, to limit its holding to situations involving FWPA permits: “We do not mean to suggest that any permit issued by any governmental entity may now bear a condition foisting upon the homeowner a duty to accept a right of suspicionless entry by the government.” Nor does the holding apply to FWPA inspections of property that is not subject to a permit, as the Court made clear that “we need not decide what showing is required under the FWPA for the DEP to gain access to residential property that is not subject to a FWPA permit, and we leave for another day the application of such circumstances in the context of open fields or when entry is sought in other nonresidential settings.”

“Here, the regulatory scheme anticipates thoughtful steps and provides constitutional recourse for the DEP to secure access to inspect land subject to a FWPA permit for compliance with the strict protections placed on freshwater wetlands and transition areas. Moreover, the permitting scheme ensures that an order issued to gain peaceful, nonforcible entry to inspect at a reasonable time when consensual entry is denied and access must be compelled.”

In one final twist, the Court then held that its holding on the weighty constitutional question of warrantless administrative searches was not even necessary to its disposition of the case. Reluctant to decide the disputed question of whether the Hubers granted permission for that inspection -- for if it found that permission had been denied, the logic of its opinion would require that it order DEP to go back and follow its prescribed procedures -- the Court held that even without any of the evidence from the initial inspection, there was more than enough evidence to sustain DEP’s finding of a violation.

Huber sends clear messages to both property owners (having a permit can make you subject to warrantless inspections) and regulators (you must build procedural safeguards into your inspection regime). The message of Huber, however, may be subject to future modification inasmuch as its holding is grounded in signals, rather than holdings, from the U.S. Supreme Court. In any event, its reasoning and its scope are likely to be tested in future cases involving other permitting programs.

* Photo courtesy of epa.gov.

Paul M. Hauge is an Associate in the Gibbons Real Property & Environmental Department.

New Report Considers Options For Tweaking Brownfields Programs in NY

Adam C. Arnold — Thu, 02 May 2013 12:26:24 -0500

New York State was among the first to enact programs aimed at remediation and redevelopment of contaminated sites. The goal of such programs is both to promote economic revitalization and to encourage private entities to remediate the state’s contaminated sites. Three such programs, the Voluntary Cleanup Program (“VCP”), the Environmental Restoration Program (ERP), and the Brownfield Cleanup Program (“BCP”), have achieved considerable success, with over 400 sites having been remediated in the past two decades. Nevertheless, policy makers continue to search for ways to make these programs better and more cost efficient. Prompted by the impending expiration of key provisions of the BCP, a report released by the New York State Comptroller’s office in April 2013, provides an assessment of these programs, as well as some options for improvement going forward.

The VCP was New York’s first attempt to address its brownfields problem. It provided participants with limited liability protection, targeted cleanup standards based on the proposed use of the site, and overall a more streamlined process than the State Superfund process. Unlike the other two programs, it did not offer any financial incentives. Nonetheless, 212 sites have been remediated through this program. The ERP supports municipal projects to remediate and redevelop brownfields. Like the VCP, the ERP provides limited liability protection to participating municipalities. Unlike the VCP, however, the ERP provides for 90% of cleanup costs. Since its inception, this program has resulted in the remediation of 68 sites at an average cost to the State of approximately $780,000 per site. The BCP, like the VCP and ERP, offers limited liability protection and a streamlined process. Unlike those programs, however, the BCP offers refundable tax credits of 22% to 50% for cleanup costs and (subject to caps based on cleanup expenses and overall dollar amounts) 10% to 22% for redevelopment costs. Since its adoption, this program has seen the cleanup of 128 sites at an average tax credit cost to the State of $9.4 million per site.

In an effort to make such programs more cost-effective without discouraging the continued cleanup and redevelopment of New York’s brownfields, several options have been proposed. These include tweaking the incentives that are currently offered by, for example, limiting or removing tax incentives entirely, or maintaining credits for cleanup costs while restricting them for development costs. Other options include reducing the administrative burdens of these programs in order to simplify participation, or creating low-cost options for projects that are viable without financial incentives.

One thing is certain: with key provisions of the BCP set to expire in 2015, there is no time for delay in considering how to maintain, and improve, the vitality of such programs in the future.

Adam C. Arnold is an Associate in the Gibbons Real Property & Environmenal Department. David A. Brooks, a Director in the Gibbons Real Property & Environmental Department, co-authored this post.

Vapor Intrusion Guidance Continues to Take Form With the Release of EPA's Final Draft Guidance

Sandro G. Ocasio — Fri, 26 Apr 2013 08:40:19 -0500

The United States Environmental Protection Agency (“EPA”) recently released its long-awaited final vapor intrusion draft guidance (“Final VI Guidance”). The nearly 200-page document establishes a complex framework for assessing vapor intrusion from analyzing key factors; making risk management decisions; and implementing, monitoring and terminating mitigation strategies and is intended to be used at any site that is being evaluated under CERCLA, RCRA, EPA’s brownfield grantees, or state agencies with delegated authority. The Final VI Guidance supercedes all prior EPA guidance documents addressing vapor intrusion assessment and mitigation including the 2002 Draft Vapor Intrusion Guidance, but takes into account the public comments submitted from 2002 through 2012 and the recommendations of the Office of Inspector General (OIG).

In addition to the Final VI Guidance, which applies generally to petroleum hydrocarbons, EPA released its companion Guidance For Addressing Petroleum Vapor Intrusion At Leaking Underground Storage Tank Sites (“PVI Guidance”), which focuses specifically on petroleum hydrocarbons released from underground storage tanks. For these situations, the guidance recommends that owners and operators assess any immediate threat to safety, conduct a site characterization and develop a conceptual site model, delineate a lateral inclusion zone, identify preferential transport pathways within the inclusion zone, sample if light non-aqueous phase liquid (“LNAPL”) exists within 15-feet of an underlying building, and mitigate as appropriate.

“When final, these guidance documents will help ensure vapor intrusion exposure assessment and mitigation actions to protect human health are undertaken in a technically, scientifically and nationally consistent manner,” stated Richard Kapuscinski, a senior official in EPA’s Office of Superfund Remediation and Technology Innovation, in a memorandum announcing the Final VI Guidance release.

The public’s reaction to the new guidance documents remains to be seen. Some early responses have raised concerns about escalating costs relating to the extensive testing required by the new guidance. Others have questioned EPA’s ability to reopen old sites where remediation has been deemed complete, but were evaluated under methods made defunct by the new guidance.

EPA is seeking public comment on the drafts, which may be submitted here until May 24, 2013. To date, over 81 public comments have been posted to the website relating to VI guidance. Other EPA technical documents relating to vapor intrusion, including the Vapor Intrusion Screening Level (“VISL”) Calculator and the Superfund Five-year Review Guidance may be found at the Office of Solid Waste Emergency Response website.

State practitioners should also be mindful of the federal guidelines. New Jersey recently issued new vapor intrusion screening levels to reflect the changes in the federal VISL. Thus, changes in the federal guidance may trigger changes in the state guidance. This blog will certainly comment on any new developments.

*Photo courtesy of epa.gov

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department.

More Streamlining of Permit Procedures for Rebuilding After Superstorm Sandy

Adam C. Arnold — Wed, 24 Apr 2013 12:49:59 -0500

A recent news release on the NJDEP website discusses new efforts by the Christie Administration to streamline vital rebuilding projects necessitated by the destruction caused by Superstorm Sandy. The new rules, which were adopted on an emergency basis on April 16th, are intended to eliminate some of the red tape typically associated with permit procedures, while ensuring the protection of coastal resources and encouraging the rebuilding of a more resilient New Jersey coastline. This is just the latest action taken by the Governor and NJDEP to ease the burden on residents, businesses and municipalities seeking to rebuild. Beginning as early as five days after the storm swept through New Jersey, actions were already being taken to waive permitting requirements for those rebuilding vital infrastructure such as roads and bridges. More recently, the Christie Administration adopted a streamlined process for property owners wanting to rebuild to new elevation standards in flood zones.

Bob Martin, Commissioner of the NJDEP, justified these emergency actions, stating that the “Christie Administration is committed to taking every step possible to help our communities become stronger than ever from this historic storm, including eliminating unnecessary red tape that would needlessly impede the important work ahead. These common sense changes will make it easier for our residents and businesses to continue on the road to recovery while ensuring continued protection of natural resources.” Many activities that require individual permits will now be allowed under general permits or permits by rule. An example of these changes is the use of permits by rule for the maintenance of beaches and dunes in advance of the 2013 hurricane season. A general permit will replace individual permits for projects that create living shorelines with vegetation, sand, organic materials and/or bivalves such as oysters and clams. Countless other measures are similarly aimed at reducing both the time and money that formerly would have been spent on more complex permit requirements.

While these rules are being implemented on an emergency basis for 60 days, there is a concurrent proposal for a permanent rule change, which will be open for public comment for a period of 30-days. Comments can be submitted online until June 5th. A public hearing on the final rule will be held on May 22nd at the Long Branch Municipal Building in Long Branch, New Jersey. Following the 30-day comment period, the NJDEP will respond to any public comments before adopting the permanent rule, which it hopes to do at the expiration of the emergency rule.

Adam C. Arnold is an Associate in the Gibbons Real Property & Environmental Department.

Gibbons Director, Irvin Freilich, Interviewed by Law360

Gibbons P.C. — Wed, 10 Apr 2013 10:11:49 -0500

In a recent interview by Law360, Irvin M. Freilich, a Director in the Gibbons Real Property & Environmental Department, discussed the most challenging case he has faced yet, as well as an aspect of environmental law he feels should be reformed. This interview also provides insight into an important lesson Mr. Freilich learned early on that he has carried with him throughout his legal career. To view the full interview, please click here.

Raising Standards for Rebuilding After Sandy

Adam C. Arnold — Fri, 05 Apr 2013 08:29:28 -0500

For the first time in more than two decades, the Federal Emergency Management Agency (“FEMA”) has updated its Advisory Base Flood Elevation (“ABFE”) maps for New Jersey’s coastal counties. The Christie Administration adopted these new standards as an emergency measure on January 24, 2013, and through formal NJDEP regulations, has now made them permanent. The revised FEMA elevations, which remain subject to change, are anywhere from two to four feet higher on average than the standards that had been in effect prior to Hurricane Sandy. New Jersey residents, particularly those impacted by flooding from Hurricane Sandy, should be aware of this change, as the NJDEP has incorporated these revised maps as the new standard throughout the state for the elevation of reconstructed homes in flood zones.

The Commissioner of the NJDEP, Bob Martin, defended the new standards as more protective of flood-prone properties, and as helping affected residents avoid a dramatic increase in flood insurance premiums once FEMA formally adopts new guidance for flood insurance. One obvious question is how some residents, still struggling to recover financially from the devastation caused by Sandy, are meant to afford such a significant undertaking as elevating their homes. According to a news release on NJDEP’s website, the Christie Administration is looking to help such residents offset this cost by providing funds from the federal Community Development Block Grant. Eligible homeowners could receive up to $150,000 for reconstruction and elevation of their flood-damaged homes, according to the article.

Depending on the amount of damage incurred at a given residence, the elevation revisions may not have immediate consequences. Homes that sustained less than 50% damage are not required to do anything, but are cautioned that they will likely be subject to much higher flood insurance costs if they choose not to elevate in accordance with new standards. If, on the other hand, a residence sustained more than 50% damage, the owner must elevate to the new standard plus one foot, as required by the Flood Hazard Area Control Act. Under the amended rules, property owners rebuilding to the new standards will not need to apply for a special NJDEP Flood Hazard Area permit, which should result in savings on permit fees and design costs, as well as saving the time that it would normally take for NJDEP review.

Without a doubt, many residents will view these revised elevation requirements as just the latest in a long line of headaches caused by Hurricane Sandy. The state, however, views these measures as essential to the recovery and future safety of its residents and their homes. As Commissioner Martin commented, “we must never allow ourselves to forget the scope of destruction from Sandy. It is absolutely critical that we rebuild stronger and more resilient in the aftermath of this historic storm.” Perhaps that is easier said than done for many residents, but just like the next storm, these new standards are coming whether New Jersey homeowners are ready or not.

*Photo courtesy of FEMA Region II Coastal Mapping Basics.

Adam C. Arnold is an Associate in the Gibbons Real Property & Environmental Department.

Russell Bershad to Speak at Upcoming RealShare New Jersey Conference

Gibbons P.C. — Thu, 04 Apr 2013 11:09:23 -0500

Russell B. Bershad, Co-Chair of the Gibbons Real Property & Environmental Department, will serve as a panelist at the upcoming RealShare New Jersey Conference on Wednesday, April 10, 2013, at the Newark Club in Newark, NJ.

Mr. Bershad's panel, "The Needs of the Modern Office User," will discuss both the design and demand for space, as companies constrict their physical space and telecommuting becomes more prevalent. The panelists will also discuss their approach to doing business in today’s challenging marketplace, including site and office selection in urban versus suburban regions, owning vs. leasing, the impact of the economy and job market on decisions, and the overall burdens and benefits of doing business in New Jersey.

For full program information or to register, please click here.

District Court Decisions Provide Further Guidance on Scope of "Arranger" Liability Under Superfund

Gibbons P.C. — Tue, 02 Apr 2013 08:01:31 -0500

The U.S. Supreme Court’s decision on superfund “arranger liability” in Burlington Northern & Santa Fe Railway Company v. United States continues to reverberate. In an article published in BNA’s Environmental Due Diligence Guide, David Freeman and Harry Clayton examine two recent decisions on arranger liability in Carolina Power & Light Co. v. Alcan Aluminum Corp. The full article is available here.

Pictured above: David J. Freeman (left) is a Director in the Gibbons Real Property & Environmental Department. Harry H. Clayton, IV (right) is an Associate in the Gibbons Real Property & Environmental Department.

Appellate Court Upholds NJDEP "Waiver Rule"

Paul M. Hauge — Wed, 27 Mar 2013 08:20:35 -0500

In a decision that gives the green light to an important component of the Christie Administration’s “Common Sense Principles” approach to regulation, the Appellate Division has upheld the New Jersey Department of Environmental Protection’s (NJDEP) “waiver rule,” which permits the department to waive strict compliance with many of its regulations in defined circumstances. Full implementation of the rule will have to wait, however, as the Appellate Court invalidated a variety of forms and guidance documents that NJDEP had posted on its website without going through the normal rulemaking process required by the Administrative Procedure Act (APA).

As we reported last year, NJDEP formally promulgated the waiver rule in April 2012, after a contentious, year-long rulemaking process that saw over 500 members of the public submit many hundreds of comments. The proposal grew out of an executive order from Governor Christie that directed all agencies to establish “Common Sense Principles” for regulations and to apply those principles in a variety of ways, including the adoption of rules that provided for waivers of conflicting or unduly burdensome rules.

The rule, which is set forth on NJDEP’s website, allows NJDEP to waive strict compliance with its rules in limited circumstances, in a manner that is consistent with the agency’s environmental mission. But there are significant limitations on that authority. A waiver may be granted only when at least one of the following criteria are satisfied: (1) the applicant is subject to conflicting rules, (2) strict compliance would be unduly burdensome, (3) the waiver would result in a net environmental benefit, or (4) the waiver is justified by a public emergency. The waiver rule does not apply to a number of categories of requirements, including requirements imposed by statute or by federal regulations; numeric or narrative standards that protect human health; and requirements concerning remediation funding sources and other financial matters.

Soon after its promulgation, and as we also reported, a coalition of environmental and labor organizations challenged the waiver rule in court. They argued that the rule was ultra vires - beyond the authority granted NJDEP by the Legislature - and that it lacked sufficiently clear standards to guide NJDEP in applying it to particular circumstances. The appellants also pointed to the Legislature’s inclusion of waiver provisions in a number of specific statutes as evidence that it did not give NJDEP any authority to grant waivers in any other situations.

In a decision released on March 21 and captioned In re N.J.A.C. 7:1B-1.1 et seq., the Appellate Division rejected these arguments, and upheld the waiver rule as a valid exercise of authority granted by the Legislature. Writing for the three-judge panel, Judge Parrillo pointed to the broad authority the Legislature has given NJDEP, and to NJDEP’s frequent practice of adopting wide-ranging regulatory programs that apply to several different programs and are based on a number of different statutes. The absence of an explicit legislative grant to NJDEP of a “general” power to waive its regulations was not dispositive, wrote Judge Parrillo, for such a power is implicit in the delegation of broad authority to make rules.

“Simply stated,” he concluded on this point, “the power to promulgate a regulation implies the incidental authority to suspend or waive its application in certain limited, well-defined circumstances provided such exemption does not circumvent any legislative enactment or purpose, or federal law, is consistent with the agency’s statutory core mission and objectives, is accomplished through a properly adopted regulation pursuant to the APA, and establishes appropriate and clear standards for the exercise of agency discretion.”

The Court also rejected the appellants’ contention that the rule lacked adequate standards to guide NJDEP’s exercise of its discretion. It is enough, said the Court, if regulations are “sufficiently definite to inform those subject to them as to what is required.” The standards in the waiver rule were definite enough to satisfy this flexible standard.

It was not, however, a complete victory for NJDEP. The Appellate Division held that NJDEP had acted illegally in posting guidance documents, FAQs, and other information on its website without going through the APA-required rulemaking process. Applying the six-factor test set forth in the Supreme Court’s 1984 decision in Metromedia, Inc. v. Director, Division of Taxation, the Court found that, contrary to NJDEP’s protestations, the postings “do more than implement the waiver rule; they establish the rules of the game.” In creating and posting the documents, the Court held, NJDEP had engaged in de facto rulemaking without following the notice-and-comment procedure prescribed by the APA. Accordingly, the Court invalidated the websites documents to the extent that they went beyond the terms of the waiver rule itself.

The decision represents a major victory for the Christie Administration in its ongoing effort to provide relief from what it sees as unnecessary and overly restrictive regulation, especially at NJDEP. For the first time, the broadly worded waiver rule gives NJDEP sweeping authority to grant waivers from regulatory requirements. The practical effect of the waiver rule may be a different story: according the department’s website, as of March 25, 2013, since it began accepting waiver applications on August 1 2012, NJDEP had received just twenty-five requests for a waiver, had denied or rejected as incomplete eleven of those requests, and had yet to grant a waiver pursuant to the waiver rule.

Paul M. Hauge is an Associate in the Gibbons Real Property & Environmental Department.

Got Those Supplier Ascertaining Allocation Blues?

Philip W. Lamparello — Tue, 19 Mar 2013 10:45:49 -0500

In L & W Supply Corp. v. Desilva, 429 N.J. Super. 179 (App. Div. 2012), the Appellate Division of the New Jersey Superior Court concluded that, in certain circumstances, a construction lien claimant has an obligation to inquire into the source of funds paid for materials provided for construction projects or face the loss of the right to file a lien. The decision fills in some of the contours of the supplier’s duty set forth by the Supreme Court in Craft v. Stevenson Lumber Yard, Inc., which held that a supplier has a duty to allocate payments based on what he knows or should know about the source of the payments. The new decision has ramifications for suppliers and owners.

The Appellate Division held that when the purchaser of materials has not provided specific “reliable” instructions or when the circumstances are such that a reasonable supplier should suspect the purchaser has not used the owner’s funds to pay for materials supplied for that owner, then the supplier must “attempt to ascertain the source of the payment of funds so that it can allocate them to the correct accounts.” The court clarifies the lengths to which a supplier must go to ascertain the source of funds paid for materials by a subcontractor under the Construction Lien Law, N.J.S.A. 2A:44A-1, et seq. In other words, a supplier is not entirely free to allocate monies from a contractor who has multiple accounts with the supplier. If the supplier has a “reason to suspect” that the contractor’s allocation is “amiss”, then the supplier must make further inquiry and verify the source of the funds so that he may apply them correctly. Thus, passivity in the face of questionable circumstances may cause the supplier to forfeit its rights under the Construction Lien Law.

The L&W case arose in 2003 when, Meridian, as owner, entered in to a contract with Patock, as contractor, to build an assisted living facility. Detail, a subcontractor to Patock, contracted with L&W to supply materials for the project. L&W had sold materials to Detail’s principal, Joe DeSilva, for several of his business entities. One such entity was the subcontractor on the Meridian project, Detail. When Detail failed to pay L&W, L&W filed a construction lien.

L&W’s invoices to Detail for the Meridian project totaled $231,794.34. Detail paid L&W $207,000 and another DeSilva entity paid L&W $10,000. However, L&W only credited Detail $103,959.45 for the Meridian project and credited $113,040.55 to other open DeSilva accounts. L&W’s lien claim was for $127,834.89, the difference between what it invoiced Detail for the Meridian project and the amount it credited Detail for that project.

The trial court granted summary judgment for L&W against Patock and Meridian for the full amount of the lien claim. Patock and Meridian appealed.

The Appellate panel reversed, finding that L&W had an affirmative duty to make an inquiry into the source of the money Detail and Desilva had paid L&W and that there were issues of fact as to whether L&W had made such an inquiry. The Court said that if the purchaser has not provided specific and “reliable” instructions on allocation the seller has a duty to inquire and “verify” the source of the payments. The Court then went further and held that if the circumstances were such that a reasonable seller should suspect the purchaser was not using funds from a specific project for that project the seller must make “further inquiry.”

While the court’s goal was to address the issue of the “lengths to which a supplier must go to discharge” its duty to allocate payments, the opinion falls short. If a purchaser did not supply any instructions on allocations it has been clear since Craft that the seller had a duty to inquire. But the court creates confusion by imposing a duty to inquire when the instructions are not “reliable” without saying much about what are or are not reliable instructions. Likewise, the court invites further litigation over whether “circumstances are such that a reasonable seller should suspect the purchaser” has not allocated payments properly.

L&W Supply raises the burden on suppliers looking to file construction lien claims. Not only do they have the duty to make inquiry and ascertain the source of payment, but, arguably, they now have a duty to police their purchasers. This will benefit project owners and should limit the filing of improper construction lien claims. What remains to be determined is the additional burdens this obligation will impose on all involved in construction projects. For example, will lenders now require, in addition to the traditional lien waivers, affidavits that instructions on payment allocation have been provided? Will suppliers seek indemnity for improper allocation instructions?

A lesson for owners to take away from this case is how easily they can avoid being drawn into lien litigation when the dispute is between downstream parties, as it was in L&W Supply. The Appellate Division dismissed Meridian from the lawsuit because a lien discharge bond had been posted, which had the effect of transferring the lien from Meridian’s property to the bond. The bond was posted by Patock, the contractor, presumably under a clause in the Meridian/Patock contract requiring Patock obtain such a bond in the event one of its subcontractors or someone claiming thru a subcontractor filed a lien. Owners should always insist their contractors be obligated to post lien discharge bonds in such circumstances and not hesitate to enforce that provision when necessary.

*Photo courtesy of morgueFile.com.

Philip W. Lamparello is an Associate in the Gibbons Business & Commercial Litigation Department. Robert J. MacPherson, a Director in the Gibbons Business & Commercial Litigation Department, co-authored this post.

Jennifer Porter to Speak at New York CLE Program on the State Environmental Quality Review Act (SEQRA)

Gibbons P.C. — Fri, 01 Mar 2013 14:58:18 -0500

Jennifer M. Porter, Esq., a Director in the Gibbons Real Property & Environmental Department, will be a speaker at Lorman’s New York CLE Program SEQRA, on Friday, March 8, 2013, in Latham, New York.

The all-day program will provide a comprehensive overview of New York’s State Environmental Quality Review Act (SEQRA), including specific discussion on regulatory requirements and compliance, the integration of SEQRA with the project review process, cumulative impacts and segmentation, the new environmental assessment forms, the proposed amendments to SEQRA, as well as offer practical advice on how to use SEQRA to obtain a better project without bankrupting the applicant. Ms. Porter will be part of the afternoon panel and will be discussing SEQRA litigation issues including the statute of limitations, standing to sue, defending or attacking negative declarations and procedural and substantive judicial review.

The program is designed for attorneys, engineers, architects, city and county planners, environmental professionals, presidents, vice presidents, water resource specialists, public works directors, surveyors and project managers. For more information and to register for the program, click here.

Gibbons Director, David Freeman, to Speak at Upcoming Strafford Brownfield Webinar

Gibbons P.C. — Wed, 27 Feb 2013 11:09:12 -0500

David J. Freeman, a Director in the Gibbons Real Property & Environmental Department, will speak at the upcoming Strafford webinar, "New Developments in Brownfield Redevelopment," on Tuesday, March 19, 2013.

Recently, brownfield development has grown more complex, creating new challenges on top of the pre-existing federal, state and local legal and regulatory requirements and permitting approvals. Mr. Freeman and his fellow panelists will discuss "hot topics" in brownfield redevelopment, including:

Bona Fide Purchaser Requirements After the Ashley II Decision
Vapor Intrusion
Brightfields
Changes in Land Use
Financing
Environmental Justice

There will also be a question-and-answer session on these and other brownfield-related topics following the speakers' presentations.

For additional information or to register at a 50% discount, please click here.

District Court Decision Provides Further Guidance on Scope of "Arranger" Liability Under Superfund

David J. Freeman — Fri, 15 Feb 2013 09:50:46 -0500

The U.S. Supreme Court's decision on "arranger liability" under Superfund in Burlington Northern & Santa Fe Ry. Co. v United States continues to reverberate. The most recent manifestation is a January 31, 2013, decision by the U.S. District Court for the Eastern District of North Carolina in Carolina Power & Light Co. v. Alcan Aluminum Corp. In that decision, the Court granted summary judgment to Georgia Power Co. on the basis that its sale of used transformers to the operator of the Ward Transformer Superfund Site (Site) did not amount to an "arrangement for disposal." In examining the "fact-specific circumstances," the Court determined that the evidence established that these transactions were sales of a "useful product" rather than ones with an intent to dispose of a hazardous substance.

The Site is an extensively contaminated facility in Wade County, North Carolina that for many years was the location of a transformer repair and recycling facility. Extensive cleanup has already taken place, and additional remediation is underway and planned. Total costs of the cleanup are expected to exceed $100 million.

Two potentially responsible parties, Carolina Power & Light and Consolidation Coal, entered into an administrative settlement with EPA to perform, inter alia, an initial removal action. They then sued more than 100 companies for cost recovery and contribution under Sections 107 and 113(f) of Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The Section 107 claims were dismissed at an earlier stage of the litigation on the basis that Section 113 provides the exclusive avenue for cost recoupment by parties that have settled with the government.

Over the years, Georgia Power had sold to Ward numerous transformers that allegedly contained dielectric fluids with polychlorinated biphenyls (PCBs). These sales were arms-length transactions, generally through auctions in which there was more than one bidder. Prior to their sale, Georgia Power cleaned most of these transformers by a “double-pumping” method. While removing free-flowing oil, that method admittedly left a sheen or residue of oil on the metal surfaces of the transformers.

In evaluating these transactions, the Court found it dispositive that (1) the transformers were sold in arms-length transactions; (2) they had “marketable value” (between $150 and $3200) when sold; (3) they continued to be “useful materials” after the sale, as demonstrated by the fact that they were refurbished and resold by Ward for a profit; and (4) Georgia Power drained and disposed of PCB-laden oil in the transformers before selling them.

Looking to the standards enunciated in Burlington Northern, the Court determined that “Georgia Power’s purpose for these transactions was to sell transformers to Ward and not [to] dispose of the oil containing hazardous waste. . . .Therefore, Georgia Power has met its burden on summary judgment by showing it did not have the necessary intent to create arranger liability under CERCLA.”

This decision marks a further evolution of the case law on “arranger liability” that has been developing in the wake of Burlington Northern. Burlington Northern involved sale of a new product. Here, the product was used, but it had not outlived its useful life. And, as in Burlington Northern, the seller was able to point to its the affirmative efforts to prevent any contamination that could result from the transaction.

The lesson is clear: the key issue in “arranger” cases is not whether the disposal could have resulted in contamination. It’s the intent of the alleged disposer, as gleaned from the myriad facts which could shed light on that intent. Cases once thought to be “open-and-shut” are now being aggressively litigated based on this new understanding of the scope of arranger liability under Superfund.

David J. Freeman is a Director in the Gibbons Real Property & Environmental Department.

NJDEP Posts FAQs on Post-Sandy Flood Elevation Standards

Sandro G. Ocasio — Mon, 11 Feb 2013 09:54:02 -0500

The New Jersey Department of Environmental Protection (“NJDEP”) recently issued its answers to frequently asked questions (FAQs) regarding the emergency amendments to New Jersey’s Flood Hazard Area Control Act Rules. The emergency regulations were signed into law by New Jersey Governor Christie on January 24, 2013, in the wake of Hurricane Sandy. The new regulations adopt the Federal Emergency Management Agency’s (“FEMA”) updated Advisory Base Flood Elevation (“ABFEs”) maps as the rebuilding standard for the entire state. The rules set minimum elevation standards for the reconstruction of houses and buildings in areas that are in danger of flooding. Because the rules are complex and so many officials and the public are affected, NJDEP issued the FAQs explaining the benefits of the amendments, who is covered, and tips for getting started.

Highlights of the rule amendments include the following:

1) Adopts height and construction requirements in FEMA’s Advisory Base Flood Elevation maps as a state standard for reconstruction.

2) Allows property owners who rebuild to the ABFEs (plus one additional foot, as has been required by the New Jersey Flood Hazard Area Control Act since 2007) to do so via Permit By Rule, thus, eliminating the need for property owners to apply for DEP's Flood Hazard Area permits, saving them substantial time and money.

3) Allows “wet floodproofing” for non-residential buildings, whereby a building may flood, but will structurally withstand the water, as an alternative to requiring elevations or dry floodproofing.

The regulations will have dramatic ramifications on flood insurance premiums. By way of illustration, if a property owner currently in an "A zone" at 4 feet below the BFE elevation is reclassified as a higher threat "V zone" and takes no action, that property will be subject to an approximate annual premium of up to $31,000 because they will be rated at a higher risk. If the same owner were to rebuild to the suggested BFE and appropriate construction standards, the annual premium would be approximately $7,000. If that owner were to rebuild 2 feet above the BFE with the construction standards for their new zone, the annual premium would be approximately $3,500. Under this illustration, the property owner could save up to $27,500 annually.

Hurricane Sandy had an unprecedented impact on New Jersey residents. Developers and property owners, particularly those affected by the hurricane, should take advantage of NJDEP’s guidance and better familiarize themselves with the new rules. Adhering to the regulations will help protect the property from flood damage in the future and help save on significant costs.

Sandro G. Ocasio is an Associate in the Gibbons Real Property & Environmental Department.

Commercial Tenants Beware: You May Be Liable For Dangerous Conditions Outside of Your Leased Area After All

Jonathan D. Klein — Mon, 04 Feb 2013 13:11:03 -0500

As discussed in a recent blog post, two months ago, a New Jersey Appellate Division panel announced that commercial tenants were not liable for a dangerous condition outside of their leasehold. Now, in a surprising ruling, a separate Appellate Division panel has reached the opposite conclusion. While it is likely that the Supreme Court of New Jersey will be asked to resolve the divergent rulings, in the meantime, commercial tenants should be aware of their shifting duties to guests and customers.

In November 2012, the Appellate Division addressed an appeal from the Trial Court’s grant of summary judgment to a commercial tenant in a slip-and-fall case, where the injury occurred in the parking lot of a strip mall. In Kandrac v. Marazzo’s Market at Robbinsville the plaintiff filed suit against the owner/landlord of a strip mall as well as a commercial tenant in the strip mall (the grocery store at which she had been shopping) prior to her injury in the parking lot. The plaintiff alleged that both the owner of the strip mall and the commercial tenant were negligent in their maintenance of the parking lot. The Trial Court granted summary judgment in favor of the commercial tenant and the Appellate Division affirmed, concluding that the grocery store “owed no duty of care to its invitee for an injury that occurred in the common area of the shopping center.”

In Kandrac, the Appellate Division relied in large part on the lease agreement between the grocery store and the property owner, which clearly stated that the tenant was not responsible for the maintenance of “common areas,” including sidewalks and parking areas. The Appellate Division acknowledged that while the covenant in the lease pertaining to the landlord’s obligation to maintain common areas in good operating condition did not relieve the tenant of all duties to its customers regarding ingress and egress, the assignment of responsibility in the lease impacted the tenant’s ability to address conditions in the parking lot. The Court concluded that the lease “squarely assign[ed]” the duty of maintenance to the landlord, and thus an innocent victim had adequate recourse against the landlord.

More recently, in January 2013, a separate Appellate Division panel reviewed an appeal from a jury award of $525,000 for a slip-and-fall where the plaintiff’s injury occurred on an exterior area around the perimeter of the commercial tenant’s unit, which the developer—not the tenant—was contractually obligated to maintain. Notwithstanding the ruling in Kandrac, in Nielsen v. Wal-Mart Store #2171 the Appellate Division held that “[s]imply because Walmart owns only the building from which it conducts its business and not the abutting perimeter or other common elements should not alone determine the duty it owes to its invitees.”

Importantly, the Nielsen court found that the fact that the developer, rather than Walmart, was contractually bound to keep the common areas in good repair carried “little weight” at all. The Nielsen court went so far as to criticize the Kandrac holding as “unduly dependent upon the assignment of responsibility for a common area defined by the defendant’s lease.” Rather than focus on the respective duties between the two commercial parties, the Nielsen court determined that the imposition of liability on a commercial tenant in such circumstances “advances important policy interests by fostering the land occupier’s constant vigilance.” The Nielsen court further opined that the commercial tenant could seek indemnification from the landlord. Thus, the imposition of a duty on the part of the tenant to maintain surrounding areas did not “unduly interfere” with the contractual relationship between the landlord and tenant.

With divergent Appellate Division decisions just two months apart, the New Jersey Supreme Court may ultimately be called upon to further clarify under what circumstances a commercial tenant has a duty to monitor the condition of common areas independent of the responsibilities contracted for in the lease agreement. In the meantime, however, commercial tenants in New Jersey should be aware that a dangerous condition in a common area could expose the tenant to liability. While a well-drafted lease provision addressing the attendant responsibilities of each party may afford some protection, the current state of the law in New Jersey remains in flux as to the extent of common law duties that may properly be imposed.

Jonathan D. Klein is an Associate in the Gibbons Business & Commercial Litigation Department. Kevin W. Weber, an associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.

Brand New Philadelphia Zoning Code Amended After Only 5 Months

Alfred R. Fuscaldo — Thu, 31 Jan 2013 09:29:45 -0500

Well that didn’t take long. Last August, following a four year process, the City of Philadelphia’s comprehensive new zoning code became law. Because of the law’s broad scope and sweeping changes, it was agreed that the Code would be revisited one year after its enactment to determine its effectiveness and to consider making any necessary changes. Yet, on January 24, 2013, a mere 5 months later ,the Philadelphia City Council, overriding a veto by Mayor Michael Nutter, passed Bill No. 120889 by a vote of 13-3 and amended the new Code, significantly complicating pre-hearing interaction between neighbors and developers which the Code was intended to streamline. While Council has enacted some minor “clean-up” amendments to the Code since August, this amendment could have substantial consequences.

Many of the amendments impact developers who have filed an appeal to the Philadelphia Zoning Board of Adjustment. Among other things, these amendments (i) significantly increase the number of people to whom a developer must give notice of its appeal, (ii) require that the notices be mailed or hand delivered, and (iii) potentially increase the number of civic association meetings that developer must have before proceeding to the Zoning Board. Whereas the new Code sought to streamline this process, these amendments will likely serve to prolong it.

So now, in addition to providing notice to the local Registered Community Organization (RCO) where the property is situated (which is an existing requirement), developers (owner-occupied residential properties containing three or fewer units are exempt) filing an appeal to the Zoning Board must now also give written notice to:

The Councilperson in whose district the property is located; and
The owner, occupant, managing agent or other responsible person for:
- every property on the same block as the subject property; and
- every property on any blockface adjacent to the blockface of the subject property; and
- every property on the blockface across the street from the subject property; and
- every property on any blockface across the street from a blockface that is adjacent to the blockface of the subject property.

Under last August’s version of the Code, where more than one Local RCO existed with boundaries that included the subject property, those Local RCOs were required to coordinate one single meeting for the developer to discuss its application with the community. No longer. This month’s amendment permits any applicable RCO to request that the local Councilperson, the Philadelphia Planning Commission or the Zoning Board determine whether there will be a single meeting with all interested Local RCOs or separate meetings with each Local RCO.

Local RCOs also now have enhanced notice responsibilities under Bill No. 120889, and are required to provide written notice (delivered by mail or by hand) of the public meeting with the developer to:

The owner, occupant, managing agent or other responsible person for:
- every property on the same block as the subject property; and
- every property on any blockface adjacent to the blockface of the subject property; and
- every property on the blockface across the street from the subject property; and
- every property on any blockface across the street from a blockface that is adjacent to the blockface of the subject property.

Compliance with these and all other notice requirements in the Code is imperative in order for a developer to be able to have its appeal heard by Zoning Board.

The composition of a Civic Design Review Committee has also been altered where the boundaries of more than one Local RCO include the subject property. In such a case, the size of the Committee will grow, with up to two RCO seats, one for each Local RCO, on the Committee, and with the local Councilperson, at his or her discretion, being permitted to add a designee to the Committee.

With several amendments passed, and other proposed Code amendments now in committee, Council does not appear to be done tinkering with the work of the Zoning Code Commission.

Alfred R. Fuscaldo is a Director in the Gibbons Real Property & Environmental Department.

Developer Alert: Philadelphia Looking to Establish Land Bank Under New State Legislation

Alfred R. Fuscaldo — Tue, 29 Jan 2013 11:54:43 -0500

The redevelopment of vacant and blighted parcels has been a cumbersome, frustrating and, in many cases unsuccessful, process for municipalities and developers alike. Pennsylvania’s new land bank legislation could change all that. Philadelphia, with its own land bank legislation is poised to take advantage of the state legislation.

In October 2012, Governor Tom Corbett signed into law House Bill No 1682, enabling legislation, which opens the door for municipalities throughout the Commonwealth of Pennsylvania to establish land banks. Land banks create a vehicle to return vacant, abandoned or tax delinquent properties back to productive use. Over 75 municipalities throughout the United States have turned to land banks as means to battle blight, rebuild neighborhoods and spur economic growth.

Frequently, multiple agencies within a city, borough or township hold title to vacant, abandoned or tax delinquent properties, complicating procedures to deal with those parcels. In sharp contrast, a land bank serves as the central repository for such government-owned properties within its boundaries so as to better position them for redevelopment.

Once created by a municipality (or multiple municipalities) by ordinance, land banks are governmental entities. Land banks are governed by a board of between five and eleven members, at least one of which must be a non-municipal employed resident of the jurisdiction who is a member of a recognized civic association in the jurisdiction. Title to the properties is held in the name of the land bank, and the land bank must make its inventory of properties available for public review and inspection.

Among other things, land banks can:

Acquire, lease and sell properties for consideration in form and amount as it deems appropriate;
Accept transfers of properties from the municipalities, tax claim bureaus and redevelopment authorities within is geographic borders;
Design, demolish, construct, rehabilitate and improve real property;
Discharge tax liens and initiate expedited quiet title actions to make the properties more attractive to developers;
Issue bonds and borrow money from government and the private sector alike in order to pursue its mission;
Retain management companies;
Enter into partnerships and joint venture agreements with municipalities and private developers to own, manage, develop and dispose of property; and
Grant easements and licenses. Land banks do not, however, have the power of eminent domain.

The City of Philadelphia has taken the steps to establish its own land bank as a way of countering the more than 40,000 vacant parcels within its borders. Legislation co-sponsored by City Councilmembers Maria Quinones Sanchez, Bill Green and Bobby Henon was introduced in early 2012 to create the “Philadelphia Land Bank.” Proffered before HB 1682 was enacted, the City’s legislation, Bill No. 120052, is still in committee and will need to be conformed to the new state law.

As currently proposed, the Philadelphia land bank law would, among other things:

Create a land bank board consisting of seven members, at least three of whom would be representatives of housing or community development non-profits, or civic associations from low or moderate income neighborhoods;
Keep an up to date inventory of available property, a map of the locations of those properties, a map of other properties within the City reasonably known to be vacant and a record of the land bank’s conveyances;
Provide mechanisms for notice and an opportunity to comment to individuals and registered community organizations prior to the use or transfer of a land bank property;
Permit the land bank to discharge liens and other municipal claims, fines and other charges against its properties;
Allow individuals to make application seeking to have the land bank request that the City certifies certain properties for upset sale;
Allow the Councilperson within whose jurisdiction a property is located the opportunity to review and to approve or disapprove of a proposed transaction concerning that property; and
Permit the land bank to enforce conditions of a sale via mortgage, deed restriction or restrictive covenant.

We will continue to update this blog to track the status of the City’s land bank legislation as it makes its way through Council.

Alfred R. Fuscaldo is a Director in the Gibbons Real Property & Environmental Department.