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Perfect Timing: The Permit Extension Act of 2008

Fall 2008Cole Schotz DocketAttorney: Wendy M. Berger

Given the recent events on Wall Street, the timing of the Permit Extension Act of 2008 (“PEA-08”) could not have been better.  Due to the slump in the State’s economy, which has had a devastating effect on the real estate and banking sectors, Governor Corzine signed PEA-08 into law on September 6, 2008.  PEA-08 took effect immediately, providing reassurance to developers whose development permits were scheduled to expire during these uncertain economic times. 

The goal of PEA-08 is to promote development once the economy has strengthened and prevent the “wholesale abandonment of approved projects and activities due to the present unfavorable economic conditions.”  PEA-08 is intended to extend the terms of governmental development permits and approvals during the current period of “economic emergency” in the state of New Jersey, which is January 1, 2007 through July 1, 2010, with up to a six-month phase-in period until January 1, 2011, thus amounting to a maximum four-year permit extension period.  Additionally, PEA-08 does not prohibit the granting of additional permit extensions otherwise provided for under law when its tolling period expires.

PEA-08 is a compromise between developers and community activists, including environmentalists.  As such, it excludes the following categories from eligibility for extension:

  1. Permits and approvals issued by the US government or any permit or approval with a duration or fixed expiration date determined by a federal law or regulation;
  2. Approvals in “environmentally sensitive areas”;
  3. Permits or approvals issued pursuant to the “Pinelands Protection Act” if the extension would result in a violation of federal law or any state rule or regulation requiring approval of the Secretary of the Interior;
  4. New Jersey Department of Transportation permits, other than right-of-way permits;
  5. Flood Hazard Area Control Act permits, except where work has already commenced; and
  6. Costal centers pursuant to the “Costal Area Facility Review Act” where (a) an application for plan endorsement was not submitted to the State Planning Commission as of March 15, 2007, and (b) was not in compliance with the Costal Zoning Management Rules.

In addition, PEA-08 does not affect any administrative consent orders issued by the New Jersey Department of Environmental Protection and in effect during the extension period, nor does it extend any approval in connection with a resource recovery facility.  

Many of our clients have already benefited from the application of PEA-08.  For example, one client sought to increase the size of its property, at the same time a neighbor was attempting to sell a portion of its property.  After obtaining minor subdivision approval from the local Planning Board, the neighbor filed for bankruptcy, which delayed the perfection of the subdivision and the closing of title.  Additionally, the neighbor was required to complete site work on the property before the minor subdivision approval could be perfected.  Under the Municipal Land Use Law, the client reappeared before the Planning Board and was granted a one-year extension of the minor subdivision approval in order to allow the neighbor to complete the site work and perfect the subdivision approval while in bankruptcy.  The extension of the minor subdivision approval was set to expire in 2007.  However, because the expiration fell during the extension period of PEA-08, our client now has the opportunity to acquire the property without the need to reappear before the Planning Board to obtain an additional extension of the subdivision approval.

Should you have any questions with regard to the applicability of PEA-08 to any existing project, permits, or approvals, please contact our Real Estate Department.

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