O McGreevey signed the Highlands Water into two distinct areas: the - PDF document

G Real Estate Alert December 2004 Recently Passed Highlands Water Protection and Planning Act Severely Impacts Property Owners in the Highlands Area By Noel M. Spear, Esq. and Brooke A. Gillar, Esq. n August 10, 2004, former Gov. James E. The HWPPA divides the Highlands Region O McGreevey signed the Highlands Water into two distinct areas: the Preservation Area and Protection and Planning Act (HWPPA) the Planning Area. A map of the Highlands into law. As open space in the state rapidly Region (which designates these areas) is included diminishes, the HWPPA serves to protect the at the end of this alert and may be found at Highlands Region by restricting development www.state.nj.us/ dep/ highlands/ highlands_map.pdf. throughout a large portion of northern New Jersey. The HWPPA became effective immediately upon The Preservation Area its signing by the governor, although the regulatory Approximately 400,000 acres are designated as framework will not be in place for some time. the “Preservation Area.” Other than a single family home, nearly all proposed development in The Highlands Region this area would require a Highlands permit. The Highlands Region is a 1,250 square mile Contrary to the long-established tradition of home area stretching from Hunterdon through Somerset, rule in New Jersey, municipalities in the Morris, Warren, Sussex, Passaic and Bergen Preservation Area must modify their land use counties, covering portions of 88 municipalities. ordinances to conform to the regional master plan Over time, public and private water supply to be established by the Highlands Council. companies have acquired substantial holdings of However, municipalities in the Preservation Area land in this area for watershed and reservoir are eligible to receive state aid to offset any purposes. Currently, about half of New Jersey’s decrease in property tax revenues which may result drinking water comes from the Highlands area, from the HWPPA. Moreover, landowners in the serving over 5 million people. Planning Area may receive payment under a The Highlands Region also provides other program established to facilitate transfer of natural resources such as clean air, contiguous development rights from properties located in the forest lands, wetlands, and plant and wildlife Planning Area to those located in other areas that habitats. Additionally, the Highlands Region have been targeted for growth. contains sites of historic significance and offers many outdoor recreational opportunities, as well as supplying over 100,000 acres of active farmland. This document is published by Lowenstein Sandler PC to keep clients and friends informed about current issues. It is intended to provide general information only. L Roseland, New Jersey Telephone 973.597.2500 65 Livingston Avenue www.lowenstein.com 07068-1791 Fax 973.597.2400

G The Highlands Council will have extensive The Planning Area powers, including the responsibility of appointing The act designates the remaining 400,000 acres administrative staff and drafting a regional master within the Highlands Region as the “Planning plan. The Highlands Council must formally adopt Area.” Although the legislation originally set out the regional master plan within 18 months of its to strongly suppress growth in this area, concerns first meeting and the plan must be updated at least over economic growth and housing supply led to once every six years. the adoption of more lenient development The HWPPA provides interim standards for regulations. development, which will apply until the Highlands The goals of HWPPA with respect to the council adopts rules and regulations. These Planning Area are similar to that of the interim standards require that nearly every type of Preservation Area, but also include the support of development obtain specific approval from the compatible residential, commercial, and industrial New Jersey Department of Environmental development in areas presently serving such Protection (DEP). The DEP is currently purposes, as well as the maintenance of a reliable considering dozens of requests for waivers from the transportation system that is consistent with “smart standards contained in the HWPPA, but has not growth” ideology. yet issued a decision. Municipalities in the Planning Area will be The Highlands Council’s authority also encouraged, but not required, to revise their land includes identifying environmental and farmland use ordinances in conformance with the regional preservation priorities within the Preservation master plan to be established by the Highlands Area, designating critical areas within the Planning Council. Area, advising the Department of Environmental Protection on Highlands water resources The Highlands Council regulations, and supporting a Highlands Transfer of To implement the objectives of the HWPPA, a Development Rights (TDR) program. Essentially, a 15-member Highlands Council will be formed. The TDR program serves to protect property value by council must have a minimum of eight elected relocating the right to build from an area where officials. Morris County, because of its population, development is prohibited, typically due to gets two appointees, while Bergen, Passaic, Sussex, environmental concerns, to a location where Warren, Hunterdon and Somerset counties each development is encouraged. The Highlands receive one. The other seven members are citizens Council’s determination of what development will of the state, with one recommended by the speaker be permitted in the Preservation Area, and its and another recommended by the president of the designation of receiving districts in the Planning Senate. Each member is to serve a five-year term, Area, are likely to produce extensive controversy with no compensation. and litigation.

G Impacts on Landowners the construction of a single family � The effect of the HWPPA on landowners dwelling provided that the construction depends on several factors: does not result in the ultimate 1. the precise location of the land; disturbance of one acre or more of land the reconstruction of any building or � 2. the purposes for which it has been used; structure for any reason within 125 and, percent of the footprint of the lawfully 3. the landowner’s intentions for future existing impervious surfaces on the site use. any improvement to a single family � dwelling, for example, an addition, As noted, any plan for significant development garage, shed, driveway, porch, deck, in the Preservation Area will require a permit from patio, swimming pool, or septic system the DEP. The DEP’s standards for reviewing a project include the following: any improvement, for non-residential � purposes, to a place of worship or Maintaining Highlands Open Waters association organized primarily for � Buffers religious purposes, or a public or private school, or a hospital Preserving Surface Water Quality � an activity conducted in accordance � Water Allocation � with an approved woodland Prohibitions on Filling Flood Hazard � management plan or the normal Areas harvesting of forest products A Maximum of 3% Impervious Surfaces � the construction or extension of trails � for Each Lot with non-impervious surfaces Prohibition of Development on Steep � the routine maintenance and � Slopes operations, or repair of transportation Prohibition of Development of Upland or infrastructure systems, the � Forested Areas construction of transportation safety projects, and bicycle and pedestrian However, the HWPPA contains certain facilities exemptions: the routine maintenance and � the construction of a single family � operations, repair, or upgrade of public dwelling, for an individual’s own use or utility lines, the use of an immediate family member the reactivation of rail lines and rail � beds existing on the date of enactment

G the remediation of any contaminated Recent decisions of the U.S. Supreme Court � site have balanced a state’s right to regulate development against the landowner’s any lands of a federal military � constitutional right to receive compensation for the installation existing on the date of taking of private property for public uses, although enactment the Court has not established a bright line rule. Conclusion Whether the HWPPA will survive a constitutional The HWPPA has dramatically impacted the challenge depends in large part upon the individual New Jersey real estate industry and other related facts of the case, i.e., whether the HWPPA limits a businesses. The Act forces municipalities, landowner’s use of his property so severely that he landowners and developers to make decisions from is effectively deprived of its economic value. an entirely new perspective. The rigorous task of complying with the Act’s requirements will If you have any questions or concerns about the undoubtedly place severe limits on those wanting Highlands Water Protection and Planning Act and how to pursue development ventures in the Highlands it may affect your property or plans for development, or Region. Any potential plans for construction in the if you have any questions about land use regulation in area will face a challenging path to success. general, please contact Noel M. Spear, at Because the Act produces such a dramatic decrease (973) 597-2330, nspear@ lowenstein.com, or in property values, there is likely to be a series of Brooke Gillar, at (973) 422-6414 or legal challenges. bgillar@ lowenstein.com. New Jersey Highlands Planning and Preservation Areas