On August 10, 2004, after a two-month delay, Governor McGreevey signed into law the Highlands Water Protection and Planning Act. The Highlands Act severely curtails new development in approximately 300,000 acres in the New Jersey Highlands – the most stringent building limitations occur in the area defined as the “preservation area.” The New Jersey Department of Environmental Protection (“NJDEP”) is preparing implementing regulations, as required by the Highlands Act. However, the Highlands Act creates specific development limitations within the preservation area that are effective immediately.

The Highlands Act specifically regulations “major highlands development,” which is defined to include any non-residential development in the preservation area, as well as certain residential developments. For major highlands development (e.g. – non-residential development in the preservation area), the Highlands Act includes the following significant impediments to development: (a) a prohibition on development within 300 feet of any Highlands Open Waters (defined to include just about every water body other than swimming pools); (b) a prohibition on creating new impervious surfaces that are greater than 3% of the land area of the lot; (c) a prohibition on development on steep slopes with a grade of 20% or more; and (d) limits on development that disturbs upland forested areas. Potentially, the most onerous restrictions include the prohibition on development within 300 feet of water bodies and the requirement that new impervious surfaces be limited to 3% or less of the property’s area. Under the “3% limit,” for example, only 3 acres would be developable on a 100 acre site. Factor in any required 300-foot water buffers, and the developable area of properties shrinks very quickly.

There are, however, several exemptions from the onerous development restrictions in the Highlands Act. One of the most significant exemption is for the reconstruction of any building or structure within 125% of the footprint of lawfully preexisting impervious surfaces. Under a plain reading of this exemption, it seems feasible that preexisting buildings and parking lots can be redeveloped without regard to the Highlands Act restrictions. There is, of course, one limitation to this exemption – only an additional ¼ acre can be developed. It is critical to note, however, than a project which is exempt from the Highlands Act development standards is still possibly subject to all other preexisting NJDEP land use regulations, such as the new stormwater standards.

One affect of the Highlands Act might be that certain properties within the preservation area are now potentially quite valuable. For instance, because of the 3% impervious surface restriction for new development, one of the only viable options for large developments within the preservation area would be the redevelopment of preexisting facilities. It is possible that the value of such properties will increase dramatically.

Almost immediately after the Highlands Act was signed, the NJDEP released a new Highlands exemption applicability form, called the “Highlands Applicability and Water Quality Management Plan (WQMP) Consistency Determination Applicability Form." Submitting this form to the NJDEP, together with a $500.00 fee, appears to be the first step in obtaining formal NJDEP approval of a project’s exemption status under the Highlands Act. Although the plain language of the Highlands Act does not appear to require an applicability determination, it makes obvious sense to obtain a formal NJDEP determination prior to commencing site development.

Another new environmental/land use law also deserves mention. In what is largely viewed as a required deal for passage of the Highlands Act, the Governor also signed into law the so-called “Fast Track Bill.” This law was designed to expedite approval for development within certain Smart Growth areas of the State. The controversial bill is generally designed to expedite state approvals for development projects – the NJDEP will need to take action on technically complete development permit applications within 45 days. This new bill has the potential to significantly decrease development delays caused by the currently protracted environmental permitting process, which will in turn result in significant cost savings to developers.

The Highlands Act and Fast Track Act are both brand new laws. As such, we should expect plenty of fine tuning and tweaking in the months to come. Only time will tell how the NJDEP will apply these new laws.