Solar Panels Not Impervious Cover in New Jersey

Posted on May 3, 2010 by David P. Steinberger

On April 22, 2010, Governor Christie signed a new law that exempts solar panels from the calculation of impervious cover under a number of state laws. The calculation of impervious cover can be a critical factor in development projects in New Jersey, as many state and municipal laws limit the percentage of a property that can be covered by impervious cover. For instance, the Highlands Water Protection and Planning Act limits the size of new developments to 3% impervious cover, while the stormwater management rules are triggered based upon the amount of impervious cover added by a project.

The goal of the new legislation is to remove regulatory obstacles to developing solar power projects. The new legislation amends the Waterfront Development Act, the Pinelands Protection Act, the Coastal Area Facility Review Act, the Highlands Water Protection and Planning Act, the Municipal Land Use Law as well as laws related to county site plan approvals, stormwater management plans and the conversion of age-restricted community developments.

Under the new law, a “Solar Panel” is defined as “an elevated panel or plate, or a canopy or array thereof, that captures and converts solar radiation to produce power, and includes flat plates, focusing solar collectors, or photovoltaic solar cells and excludes the base or foundation of the panel, plate, canopy, or array.” Thus, while the solar panel itself is not impervious, the area where the solar panel attaches to the ground – the base or foundation – is still deemed impervious.

The new law does not, however, change how the calculation of impervious cover is undertaken under the Freshwater Wetlands Protection Act and the Flood Hazard Area Control Act. The legislative history does not indicate whether this was a deliberate or inadvertent omission. However, given the strict development limitations under these two laws, and the large areas covered by them, this omission could be significant.

Any New Jersey developers seeking to build a solar energy project, or include solar power generation as an ancillary feature of a development, will need to consult with their development team professionals to consider how this new legislation might impact their project.

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Money May Be Available for Lost Development Potential in the New Jersey Highlands Region

Posted on February 2, 2010 by David P. Steinberger

In 2004, the New Jersey Highlands Water Protection and Planning Act (the “Act”) became law. The law created two distinct regions, the Preservation Area and the Planning Area. Development in the Preservation Area was severely restricted under the Act. To address the loss of development rights in the Preservation Area, the Act also authorized a Transfer of Development Rights (“TDR”) program to be administered by the New Jersey Highlands Council (the “Council”).

The TDR program is designed to allow property owners in the Preservation Area to sell their development rights [Highlands Development Credits (“HDCs”)] to developers in the Planning Area. Developers that buy HDCs will be able to use those purchased HDCs to undertake more intensive development than would otherwise be permitted. Planning Area municipalities can voluntarily elect to become “Receiving Zones,” which are areas where HDCs can be used for more intensive development. Because few Planning Area municipalities are opting to become Receiving Zones, there is an amendment to the Act currently pending before the state legislature which would expand the program and allow any municipality in the state to become a receiving Zone for HDCs

The Council further created a Highlands Development Credit Bank (the “Bank”), and has authorized the Bank to purchase HDCs to “jump start” the TDR program and alleviate financial hardships affecting property owners in the Preservation Area. The Bank has been funded with $10 million, and has started the process of purchasing HDCs. The Bank’s purchase of HDCs will be based on a priority ranking undertaken by the Bank. The First Priority will be to buy HDCs for properties where both (a) the owner is experiencing “extenuating financial circumstances” and their equity in the property is “substantial” in relation to their net worth and (b) the owner had all development approvals except certain Department of Environmental Protection approvals when the Act was passed. The Second Priority is to purchase HDCs for properties where the property owner satisfies only (a) above. The Third Priority is to purchase HDCs for properties where the property owner only satisfies (b) above.

At this time, the Bank is only purchasing HDCs for residential-zoned properties. The initial value of one HDC is $16,000. To implement this program, the Council has created an “HDC Estimator Tool” on its website (http://www.highlands.state.nj.us/), which will provide land owners with a range of expected HDCs for properties in the Preservation Area. Thus, if the Council has estimated that a property may be “worth” 12-14 HDCs, the Bank would buy those HDCs for between $192,000 and $224,000.

The first step in the process of redeeming HDCs is to submit an HDC Allocation Application with the Council. Based upon this application, the Council will (a) determine if the applicant meets the “extenuating financial circumstances” criteria and (b) make a formal determination of how many HDCs apply to the property. If the property owner accepts the Council’s HDC allocation, the next step is to submit an HDC Certificate Application to the Bank. These applications will be prioritized by the Bank and the Bank will issue offers to buy those credits. If an offer is accepted, the property owner will record a conservation restriction in the property’s title. This conservation restriction will prevent any future development of that property. At that point, the Bank will make its payment to the property owner.

As of January 7, 2010, the Council has received only eleven applications. For this first round of hardship HDC purchases, the Council is accepting HDC Applications until March 1, 2010 and the Bank is accepting HDC Certificate Applications until April 15, 2010. Therefore, if you are interested in obtaining payment for lost development rights in the Highlands Preservation Area, you should act quickly to explore this option.
 

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