Governor Christie Signs Legislation Creating Fort Monmouth Economic Revitalization Authority

On Tuesday, Governor Chris Christie signed legislation designed “to provide investment, continuity and economic growth to the Fort Monmouth region by creating the Fort Monmouth Economic Revitalization Authority (FMERA).”  The FMERA replaces the Fort Monmouth Economic Revitalization Planning Authority and is expected to move forwardwith the reuse and redevelopment plan for economic development, growth and planning, for the Fort Monmouth facility,with a focus on technology-based industries, for the 1,127 acres of real estate at Fort Monmouth following the base closure.

According to release from the Governor’s Office: “With the closure of Fort Monmouth very near on the horizon, it is vital that State and local leaders are prepared with a comprehensive, long-term plan to ensure that economic continuity, stability and growth are maintained for the regions effected by the closure,” said Governor Christie.  “Through the joint efforts of State, county and municipal leaders, Fort Monmouth can and will remain a driver of economic growth for both the region and the State.  By creating the Fort Monmouth Economic Revitalization Authority to take action on a comprehensive and strong economic development plan, we are ensuring that the municipal, county and State resources and guidance will be employed in partnership to make certain that Fort Monmouth will be a home for job creation and economic growth.”

According to the statement from the Governor’s Office, the Fort Monmouth Reuse and Redevelopment Plan is a “highly collaborative blueprint for action” to:

• Promote, develop, encourage and maintain employment, commerce, economic development, and the public welfare;
• Conserve natural resources; and
• Advance the general prosperity and economic welfare of the people in the affected communities and throughout the state.

Under the new law, FMERA is given a multitude of tools to revitalize and redevelop the Fort Monmouth area and implement the revitalization plan.  Among these are the abilities to undertake redevelopment projects, adopt development and design guidelines and land use regulations in connection with the provision of utilities, streets, roads or other infrastructure required for the implementation of the revitalization plan. The New Jersey Economic Development Authority will staff FMERA, which is also authorized under the new law to enter into an agreement with the EDA to act as the designated redeveloper.

According to a Star Ledger report:

Sponsors of the legislation, who gathered with Christie at Fort Monmouth for the bill-signing ceremony, estimate the new development, which would span at least two decades, would generate 4,900 full-time jobs, offer more than 2 million square feet of office space and pump $24.7 million in state wage taxes. The plan also calls for building at least 2,200 housing units for low-to-moderate income families as well as market rate homes.

The nine-member authority would be composed of the mayors of the three host communities, a member of the Monmouth County Board of Freeholders, a Monmouth County resident appointed by the governor, two other gubernatorial appointees, a member of the governor’s staff and the chairman of the New Jersey Economic Development Authority.

Monmouth County Freeholder Director Lillian Burry said county and local officials are looking to attract high-tech facilities, such as communications. The county has already expressed interest in taking over the base’s community center, library and bowling alley and has been guaranteed 350 acres for open space, she said.

The legislation gives the Economic Development Authority the ability to secure financing for the development projects and allows the agency to act as a designated redeveloper.

For a copy of the S-917, the enabling legislation, click here.

For the full Star Ledger article, click here.

NJ Economic Stimulus Bill Provides New Incentives for Development

The New Jersey Economic Stimulus Act of 2009 recently passed both houses of the Legislature and was signed into law by Governor Jon Corzine on Monday, July 27th.  The Act is an amalgamation of initiatives designed to reinvigorate New Jersey’s economy and includes several incentives to jump start commercial real estate development. 

According to the Assembly Budget Committee statement in support of the Act, the Act includes the following: (1) an Economic Redevelopment and Growth Grant Program; (2) authorization for certain municipalities to impose special taxes and surcharges to fund redevelopment activities and certain programs; (3) expansion of transferability of tax credits under the New Jersey Emerging Technology and Biotechnology Financial Assistance Program and changes to the “Urban Transit Hub Tax Credit Act”; (4) relief to certain developers otherwise subject to the “Statewide Non-Residential Fee Act”; (5) grants to municipalities for affordable housing; (6) changes to improve the financing of higher education facilities in New Jersey; and (7) relief to certain manufacturing companies taxes and surcharges on energy and utility services.

Below, I have highlighted the portions of the Act with the most impact on the commercial development community: the Economic Redevelopment and Growth Grant progam; the amendments to the Urban Transit Hub Tax Credit Act; and the relief to developers from the Statewide Non-Residential Fee Act which requires a 2.5 percent contribution of the equalized assessed value of new non-residential construction to a state or municipal affordable housing trust fund.

Economic Redevelopment and Growth Grant program

The Act authorizes State and local incentive grants to developers in “qualifying economic redevelopment and growth grant incentive areas,” which includes the Metropolitan and Suburban planning areas (Planning Areas 1 and 2), centers designated under the State Development and Redevelopment Plan and federal land approved for military base closure.  Projects in transit villages are not eligible for State incentive grants but are eligible for municipal incentive grants.  This program replaces the revenue allocation district (“RAD”) financing program which was seen as too complicated and was sparingly considered as an option by developers and local governments.

Incentive grants are intended to help fill project financing gaps in a difficult financial climate.  To qualify, a developer must contribute its own capital for at least 20 percent of the total project cost and must certify that additional capital is not available from other sources.

Project revenues will fund the grants.  For State grants, the Economic Development Authority and the developer will enter into a redevelopment agreement, which would also require local approval by municipal ordinance.  Such agreements would provide that up to 75 percent of State revenues realized from a project would be pledged toward a grant.  For municipal grants, municipalities may pledge their revenues from payments in lieu of taxes, lease payments to the municipality, property taxes and any additional taxes authorized by law (motor vehicle rental taxes, payroll taxes, parking taxes).

An incentive grant can extend up to 20 years and cannot exceed 20 percent of the total cost of the project.  A determination must be made that the revenues will exceed the grant funds.

Urban Transit Hub Tax Credit Act Amendments

Current law allows a business with a certain level of capital investment in a qualified business facility within an urban transit hub and that employs at least 250 people at the facility to qualify for a tax credit equal to the qualified capital investment, which must be taken over a 10-year period against the corporate business tax or insurance premiums tax liability.  Certain tenants were also able to take advantage of a tax credit, provided they met certain thresholds.

The Act makes numerous changes to the Urban Transit Hub Tax Credit program, including the following: 

• The “urban transit hub” definition is expanded to include in “eligible municipalities”: (1) property located within a half-mile radius surrounding the mid point of one of up-to-two underground light rail stations’ platform areas that are most proximate to an interstate rail station; (2) property adjacent to, or connected by rail spur to, a freight rail line if the business utilizes that freight line for loading and unloading freight cars on trains; and (3) within a half-mile of all light rail stations (and within a mile of the Camden rail station).  “Eligible municipalities” are defined pursuant to the criteria set forth in N.J.S.A. 34:1B-209 as Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson and Trenton.
• Adds a mixed use component to definition of “qualified residential project” for purpose of receiving a credit.
• Lowers the capital investment threshold from $75,000,000 to $50,000,000 for an owner of a “qualified business facility”, and from $50,000,000 to $17,500,000 for a tenant that occupies a leased area of the qualified business.
• Provides that for a business applying before January 1, 2010, its credit shall not be reduced if it relocates to an urban transit hub from another location or locations in the same municipality.
• Allows the full-time employee requirement to be met by certain types of contract workers who perform work at the qualified business facility for at least 35 hours a week and allows out-of-State residents working in New Jersey to be counted as “full time employees.”
• Allows a business to use an affiliate to satisfy the employment or capital investment requirements of the program.
• Clarifies how tenant investment will be included in the capital investment calculation for the qualified business facility, by providing that the capital investment made by a tenant will be included in the owner’s capital investment to the extent necessary to meet the minimum capital investment threshold. Any capital investment made by a tenant above this amount will be added to the amount of tax credit the tenant is otherwise entitled to receive based on its portion of the net leasable area in the qualified business facility.
• Allows up to three tenants to meet the 250 employee requirement in the aggregate.
• Relaxes the 10 percent Statewide full-time workforce reduction trigger before the business suffers a mandatory forfeiture of an annual tax credit by setting the trigger at 20 percent.
• Expands the urban transit hub credit zones to include business headquarters property that can become a qualified investment facility within a one-mile-wide zone in a qualified municipality.
• Clarifies that S-corporations and limited liability corporations are included as businesses that may be eligible to participate in the program and clarifies that a tax credit is not to be applied against individual New Jersey gross income tax liability.  An individual who is a holder of a credit may sell their credit, covering one or more years, under the tax credit transfer certificate program for consideration received by the business of not less than 75 percent of the transferred credit amount.
• Removes the provision that casino licensees cannot qualify for the program.
• Allows reduction of the credit by 20 percent if less than 200 employees are employed, even if a business relocates to an urban transit hub from another location in the same municipality.
• Changes the timing of the trigger for forfeiture of the credit so that a business cannot reduce its workforce by more than 20 percent in the last tax accounting or privilege period prior to approval, rather than the greater of the two following periods: in the period prior to approval or in the period prior to the enactment of the original 2007 legislation.

Note that the Act also eliminates any “as of right” qualification and adds subjective criteria for the eligibility for a tax credit, namely that a business shall demonstrate to the EDA at the time of application, that the State’s financial support will yield a “net positive benefit” to the State and the eligible municipality.  Also, a business will not qualify for a credit if the capital investment was the basis for a grant under the InvestNJ Business Grant Program Act.

Additionally, the Act provides for a new credit for “qualified residential projects” under the Urban Transit Hub legislation.  “Qualified residential projects” are defined as a building or buildings, including a mixed use project, consisting predominately of residential units, located in an urban transit hub.  The definition of “residential units” includes rental units, hotel rooms or dormatory rooms.

A developer may receive a credit up to 20 percent of its capital investment for a “qualified residential project.”  To be eligible, a developer shall demonstrate, through a project pro forma analysis, that the project “is likely to be realized with the provision of tax credits . . . but not likely to be accomplished by private enterprise without the tax credits.”

A developer must make or acquire capital investments totalling at least $50,000,000 in a qualified residential project to be eligible for a credit.

Non Residential Development Fee and Affordable Housing

The Act will exempt certain property from the 2.5 percent development fee imposed by the “Statewide Non-Residential Fee Act,” N.J.S.A. 40:55D-8.1 to -8.7 (“SNRF” or “A-500”). 

Development Fee Moratorium: Property which received preliminary or final site plan approval from a municipality or from the New Jersey Meadowlands Commission before July 1, 2010 will be exempt from the fee imposed by the SNRF/A-500, provided that a local building permit is issued prior to January 1, 2013.

Ban on Local Non-Residential Fee Ordinances Remains: The Act does not abolish the section of the SNRF/A-500 which prohibits municipalities through local action from imposing their own obligations on non-residential development.

Refunds: The Act requires that, in most cases, any funds deposited under the SNRF/A-500 with the State or a municipality be refunded to the developer.  The exception is where a developer received preliminary or final site plan approval prior to the effective date of SNRF/A-500 (July 17, 2008) and agreed to pay a fee based upon a local development fee ordinance.  In that instance, only the difference between the local fee and the 2.5 percent statewide fee will be eligible for a refund.

Municipal Obligation: Furthermore, the Act provides that the portion of a municipal fair share affordable housing obligation created as a result of the non-residential development will be reduced or eliminated if the collection of fees are suspended and if there are insufficient funds in the State affordable housing trust fund or other State or federal sources of funding within the next two years following enactment.

For an example of the practical implications of the Act on actual “in the pipeline” development projects, read the text of Senator Raymond Lesniak’s (D-Union) speech to the New Jersey Business and Industry’s Economic Development Forum at NJ Voices here.

Affordable Housing Amendments, Permit Extension Act Pass Legislature

In a frenetic day of wheeling and dealing on the $32+ billion State Budget, two key bills that we have been closely tracking received approval from both houses of the legislature, sending them to Governor Corzine’s desk with the expectation that both will be signed in short order.

Affordable Housing Policy Reform

A-500/S-1783, which amends portions of the Fair Housing Act, the Local Redevelopment and Housing Law and the Administrative Procedure Act, provides significant changes to New Jersey’s approach to affordable housing requirements. Central to the bill is the elimination of Regional Contribution Agreements (RCAs) except in specific regional planning areas such as the Highlands, Pinelands, Ft. Monmouth, Meadowlands and Atlantic City region. If a municipality outside of these regional planning areas has received COAH or court approval to proceed with a RCA, they may do so. If it has not received final approval, it must make provision for constructing its fair share obligation within its borders.

The legislation anticipates that the elimination of RCAs will be counterbalanced by a new statewide 2.5 percent development fee which will be imposed on “all” non-residential development (with some exceptions such as non-residential development within a designated transit village area, structured parking facilities, etc.) including expansion of existing facilities. Under the provisions of the bill, the development fee must be paid prior to the issuance of a Certificate of Occupancy. The legislation contemplates payment under protest and the ability to challenge the assessment of the “equalized assessed value” which is the basis for imposition of the fee. This legislation effectively eliminates the requirement under current COAH regulations that a non-residential developer provide an affordable unit for every 16 jobs purportedly created and pre-empts any current municipal development fee ordinances.

Municipalities that petition COAH for substantive certification of a housing plan can create dedicated escrow funds for the revenues generated from new non-residential construction which must be spent on meeting that municipalities affordable housing needs within a four-year period. Those municipalities that have not applied for substantive certification must send the fees collected to a statewide Affordable Housing Trust Fund, which will be administered by DCA for the creation of affordable housing throughout the state.

The legislation also requires state agencies, when preparing rule proposals, to include a “Housing Affordability Impact Analysis” and “Smart Growth Development Impact Analysis” to force regulatory agencies to focus on whether proposed regulations will have an impact on the affordability or availability of housing.

Other amendments include requiring the replacement of affordable housing on a 1:1 basis when a redeveloper eliminates existing affordable housing in constructing or assembling a redevelopment project and mandates that the comparable housing be located in or in close proximity to the redevelopment; mandating a 20 percent affordable housing component in designated transit village and urban transit hub areas while eliminating the 2.5 percent non-residential development fee for such projects; and mandatory inclusionary development requirements for property that is rezoned from commercial or industrial to residential. The legislation also encourages that financial incentives, including density bonuses, be incorporated into a municipality’s fair share/housing plan.

Permit Extension Act

A-2867/S-1919 provides for the tolling of many types of development permits and government approvals from January 1, 2007 to July 1, 2010. Under no circumstances will approvals tolled under this legislation exend further than six months past the July 1, 2010 extension period. Notable exceptions that are not tolled by this Act include approvals for development in “environmentally sensitive areas” and flood hazard area permits, unless a project has already commenced.

We will be providing a more comprehensive overview of the final versions of these legislative proposals once they are signed into law by Governor Corzine.

Assembly Poised to Pass Affordable Housing Compromise Bill

On Monday, June 16, the full Assembly is expected to vote on a revised version of A-500, a wide-ranging affordable housing reform bill, which eliminates widespread use of regional contribution agreements (RCAs). The Assembly Appropriations Committee passed the bill, with amendments, on Thursday. Also on Monday, the Senate Budget and Appropriations Committee will take up similar legislation which is the result of a compromise between Assembly Speaker Joseph Roberts and State Senator Ray Lesniak (D-Union). Click here for Assembly Affordable Housing Bill – Revised

According to Saturday’s Star Ledger:

The Roberts-Lesniak legislation is designed to reshape New Jersey’s 20-year affordable housing effort. It would use $20 million of the $80 million to $120 million the state and municipalities hope to raise through a fee on the new commercial development for affordable housing in urban areas, Lesniak said.

The bills would create five zones: the Meadowlands, Fort Monmouth, the Highlands, the Pinelands and Atlantic City. Towns within four of the zones could transfer no more than 50 percent of the housing they are required to provide to a neighboring town. Only the Atlantic City zone would be permitted to exceed the 50 percent cap because of a large demand for affordable housing in the area.

For the full article, click here.

The Home News Tribune also reported on the legislation, calling the bill “a sweeping overhall to the state’s affordable housing policy.” The Home News article also highlighted other proposed changes:

The bill would also levy a new fee — 2.5 percent — on all nonresidential development to finance housing construction or rehabilitation.

If passed, all state-assisted development projects would have to set aside 20 percent of units for affordable housing; 25 percent of affordable housing units would be set aside as “very low income” for families earning 30 percent of the state’s median household income; and developers including affordable housing in their projects would receive density bonuses, meaning they could construct more units than currently allowed.

For the full article, click here.

Fort Monmouth Redevelopment Concept Plan Preview

In a preview of the draft redevelopment concept plan for the 1,100 acre Fort Monmouth Army base, an Associated Press report states that high-tech research would continue to be an integral part of the base when it transitions to private development, with an anticipated $1 billion private investment in new housing, retail and recreational opportunities.   The plan was presented to reporters at a meeting on March 18.  It is scheduled to be unveiled at a public meeting at Monmouth Regional High School in Tinton Falls on Wednesday, March 19.

 According to the AP report:

As expected, the plan combines different uses. In general, heavy commercial uses would be closest to the Garden State Parkway, at the western edge of the fort. A combination of retail and housing is envisioned by the fort’s arched brick gates along bustling Route 35. A small hotel and spa is proposed at the eastern edge along the Shrewsbury River.

In between would be nearly 1,500 homes and apartments, with 25 percent of them set aside for low- and moderate-income residents, along with shopping and dining centers, offices and labs. All would be connected by about six miles of bike paths and walkways allowing for car-free commuting and living.

The fort’s 18-hole golf course would remain, but under a private developer who could build a 150-room hotel and conference center, according to the preliminary plan.

A public comment period will follow this presentation, with the draft plan to be finalized by June.  Following the comment period, it will be submitted to the U.S. Department of Housing and Urban Development in September.  Following plan approval, the Army will market the plan to developers, according to the AP report.

While implementation is years away as the base is phased out and the plan percolates though multiple layers of local, regional, state and federal agency review, it will be interesting to see how the final product, years from now, compares to the plan presented on Wednesday.

For the full article, click here.

For the Asbury Park Press article entitled “Fort Could Go Green,” click here.

Fort Monmouth Redevelopment Concept Plan To Be Unveiled on March 19

On Wednesday, March 19, the Fort Monmouth Economic Rivitalization Planning Authority is set to present a preliminary concept plan for the redevelopment of Fort Monmouth, a 1,100 acre army base that lies within the municipal borders of Tinton Falls, Oceanport and Eatontown.  The base is scheduled for closure by 2011. 

This is the first major public presentation in the process to formulate a redevelopment plan for the base, which must be finalized by September 8, pursuant to federal law.  The base includes buildings which support high-tech operations which the mayor of Tinton Falls would like to see transitioned to the private sector in the redevelopment process.  The mayor of Eatontown also commented favorably on the creation of multiple housing options with a retail business at the base.

The presentation will be held at Monmouth Regional High School   One Norman J. Field Way, Tinton Falls, starting at 6:30 p.m.  A question and answer period will follow the presentation.

For more information, see the Asbury Park Press story here.