Wednesday, January 27, 2016

Is your construction permit expiring in New Jersey?

In the midst of the economic recession, the New Jersey State Legislature, in 2008, recognized that permits for a multitude of developments would expire before the projects could find the necessary construction financing. Lawmakers passed the Permit Extension Act (PEA) to toll the expiration of various approvals necessary for development through 2012. Additional extensions were approved in 2012 and in 2014.      

A bill to grant an additional extension failed in the recently ended legislative session, prompting Gibbons attorneys Howard D. Geneslaw and Andrew J. Camelotto to publish
the alert below.

No Further Extensions of New Jersey’s Permit Extension Act

The state legislature took no action to further extend New Jersey’s Permit Extension Act (“PEA”) during the recently concluded legislative session, which means that permits and approvals extended by the PEA’s tolling period either have expired or will expire soon. Pursuant to the terms of the act, the expiration date for most approvals covered by the PEA are tolled through June 30, 2016, with certain approvals expiring before that date, making right now the time to evaluate projects approaching construction to determine which existing approvals were extended by the PEA, the exact expiration date of such approvals, and whether further extensions are available under other laws. After such an evaluation, developers and project managers can then determine whether approval rights can be fully vested prior to their expiration date and, if not, whether an extension, amendment, or renewal of the approval is required.
The PEA was initially enacted in 2008 in response to “the crisis in the real estate finance sector of the economy.” The purpose of the PEA was to toll the expiration of various approvals necessary for development through 2012. The PEA was later amended in 2012 and again in 2014, due to the then “current national recession,” extending the tolling of those approvals until December 31, 2015. The PEA provides for the tolling of any “approval,” as defined in the statute, which is or was in existence during the extension period (January 1, 2007 through December 31, 2015). Most subdivision, site plan, and variance approvals granted pursuant to the Municipal Land Use Law are encompassed within covered “approvals,” as are many approvals granted by the New Jersey Department of Environmental Protection (NJDEP), New Jersey Meadowlands Commission (NJMC), New Jersey Pinelands Commission, and various other state agencies. Caution, however: there are important exceptions to the general rule above, and some permits and approvals are expressly excluded from the tolling which the PEA provides.
Given that the PEA has not been extended further, those with existing approvals tolled by the PEA should evaluate them now, determine their present status, and whether the project can move to construction before the approvals expire. If financing is an issue, there are various grant, loan, and other incentive programs which should be explored. If there are reasons why the project may not move forward before the expiration of an approval, other methods of extension could be available and should be investigated. This could be particularly important in situations where changes have occurred in applicable regulations, since extensions allow an applicant to rely on the regulations in effect when the original approval was obtained, while new applications to replace expired approvals must comply with the new regulations now in effect. Please contact Howard D. Geneslaw or Andrew J. Camelotto if you have a project for which you would like this analysis performed.
Howard D. Geneslaw is a Director in the Gibbons Real Property & Environmental Department. Andrew J. Camelotto, an Associate in the Gibbons Real Property & Environmental Department, co-authored this post.

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