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IT'S NOT EASY STAYING GREEN:
A SUMMARY OF THE GARDEN STATE PRESERVATION TRUST ACT
by James P. Rhatican, Partner,
Real Estate and Land Use Practice Group
In the November 1998 election, the voters of the State of New Jersey approved by referendum an amendment to the State Constitution that would dedicate $98 million per year from the State budget for the purpose of funding the acquisition and preservation of open space within the State. The Assembly recently approved the bill that would execute this constitutional amendment, entitled the "Garden State Preservation Trust Act." The Act both implements its own preservation measures and enhances the existing Green Acres legislation.
The Act establishes the Garden State Preservation Trust, an entity "in but not of the Department of the Treasury." The sole purpose of the Trust is to allocate the approved funding to the Department of Environmental Protection ("DEP"), the State Agriculture Development Committee ("SADC") and the New Jersey Historic Trust ("NJHT"), the three State agencies that have been designated as the vehicles of this, the State's most aggressive conservation program to date. The Trust enjoys most of the powers of other State agencies, including the powers to sue, to contract, and to borrow money and issue bonds and subordinated debt. However, the Trust is not empowered to acquire or hold real property itself, and is not endowed with the power of eminent domain.
The Act contemplates that the role of the Trust shall be limited to providing financing, and that the DEP, SADC and NJHT shall be the instrumentalities responsible for actually acquiring and holding open space. In fact, the State is directed by the Act not to use the power of eminent domain unless specifically approved by both Houses of the Legislature. However, the power of eminent domain may be used without legislative approval if used only to establish a value for lands to be acquired from a willing seller. That is to say, if a property owner is willing to convey its property in connection with this program, but contests the offer made by the State, condemnation may proceed to allow condemnation commissioners to act as a neutral arbiter and determine just compensation for the property in question. It remains to be seen whether this Act would allow the State to appeal de novo a commissioners' award.
On an annual basis from the year 2000 to 2009, the State Treasurer shall credit to the Trust $98 million, allocated from State sales and use taxes. Such monies will be maintained in the newly-created Garden State Preservation Trust Fund Account. In addition to such moneys, the Trust is authorized to issue bonds, notes or other obligations in an amount not to exceed $200 million annually, with an aggregate limitation of $1 billion over the next ten years.
Of the $98 million to be credited to the Trust annually, $6 million shall be transferred to the Garden State Historic Preservation Trust Fund, and of the balance, 60% shall be transferred to the Garden State Green Acres Preservation Trust Fund, and 40% shall be transferred to the Garden State Farmland Preservation Trust Fund. Each of these trust funds are to be established by the State Treasurer pursuant to the Act. The percentages allocated among the trust funds are net of any amounts necessary to refund bonds issued by the Trust.
Of the funds transferred to the Green Acres Preservation Trust Fund, 50% shall be allocated for use in acquiring and developing land by the State, 40% shall be allocated for providing grants and loans to assist local government units in acquiring and developing land, and 10% shall be allocated for providing grants to assist qualifying tax exempt nonprofit organizations to acquire and develop lands. All lands acquired by the State, counties, municipalities or qualifying nonprofit organizations must be utilized for recreation or conservation purposes.
A grant to a local government unit may be in an amount not to exceed 25% of the cost of acquisition, except that in certain circumstances, that "not to exceed" amount may be increased to 50% or as much as 75% of the cost of acquisition or development. A loan to a local government unity may be in an amount up to 100% of the cost of acquisition or development, and shall bear interest in an amount not to exceed 2% per year, for a term of thirty years for an acquisition project and twenty years for a development project. A grant to a qualifying nonprofit organization by include up to 50% of the cost of acquisition or development.
Monies transferred to the Farmland Preservation Trust Fund may be used, for among other purposes, to provide grants to local government units of up to 80% of the cost of acquisition of development easements on farmland, or fee simple titles to farmland from willing sellers only. Monies transferred to the Historic Preservation Trust Fund may be used to provide grants not to exceed $750,000 to local government units or qualifying nonprofit organizations to pay a portion of the cost of preservation of historic properties.
As in the Green Acres regulatory scheme, land acquired or developed by the State, local government unit or qualifying nonprofit organization for recreation and conservation purposes pursuant to the Act shall not be used or transferred for use other than recreation or conservation, without the prior approval of the Legislature and, in the case of a local government unit or qualifying nonprofit organization, a public hearing.
The Act also establishes in the DEP an Office of Green Acres, which is responsible for administering all provisions of the Act pertaining to the funding of acquisition and development of land for recreation or conservation purposes. It also is directed to develop criteria for the evaluation and prioritization of projects authorized by the Act. The Office of Green Acres is also charged with administering all grant and loan programs previously established for the acquisition and development of open space, including the Green Trust, N.J.S.A. 13:8A-1 et seq.
The Trust is obligated to report to the Governor and Legislature on an annual basis, setting forth its complete operating and financial statement for the previous year, a five-year financing plan, and a short-range financing plan for the coming year. Conservation projects will be proposed by each of the DEP, SADC and NJHT. The Trust may delete, but not add, projects from each agency's list; however, the Trust may suggest projects to any of the relevant agencies. The Trust is also responsible for proposing legislation appropriating monies from each of the trust funds for acquisition projects.
The Trust itself shall consist of nine voting members, including the Commissioner of Environmental Protection, the Secretary of Agriculture, the Secretary of State and the State Treasurer. The balance shall be made up of five public members, including one who shall be appointed by the Governor.
So that municipalities shall not be deprived of revenue, properties acquired pursuant to the Act shall be subject to property taxes for a period of thirteen years, the amount of which shall diminish to zero by the fourteenth year after acquisition.
Through the mechanisms implemented by this Act, it is hoped that the State can save substantial open space in the State of New Jersey. Of particular interest will be the quantity of land obtained from voluntary sellers, in light of the Act's qualified prohibition of the State's exercise of its power of eminent domain. Traditionally, preservation of open space has been viewed as a public purpose for which property may be acquired using eminent domain. Furthermore, it will be worth watching whether, and how, these preservation powers are employed in the context of local or regional redevelopment plans.
In addition, it shall be interesting to note whether, and to what extent, the relevant State agencies use the allocated powers and funds to acquire brownfields or other environmentally contaminated properties that would otherwise remain undeveloped. Likewise, while the Act does not expressly address the use of allocated funds to remediate adverse environmental conditions, this is arguably a legitimate use; certainly, it is consistent with the general purpose of the Act. It remains to be seen how creatively the State will utilize these substantial monies.
© 1999 Connell Foley LLP . The foregoing is provided for informational purposes only and not as legal advice. Any questions about the law or your rights and obligations should be reviewed by legal counsel engaged by you and provided with your specific fact situation.
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