Local Government and the Highlands

The Highlands Water Protection and Planning Act (Highlands Act), signed by Governor McGreevey on August 10, 2004, will have substantial impacts on local government. The new law designates an 800,000 acre Highlands Region (Region) that includes 88 municipalities in 7 counties - Bergen, Hunterdon, Morris, Passaic, Somerset, Sussex and Warren -- in the northern and western sections of the state.

The Region is divided roughly in half. One part is identified as the preservation, or core, area and the other as the planning area. In the preservation area, subject to some minor exceptions, future development activities will be severely restricted. Department of Environmental Protection (DEP) permits will be required and will be difficult, or nearly impossible, to obtain. Planning area municipalities will be encouraged to amend their master plans and development regulations to conform with the Highlands Water Protection and Planning Council's (the Council) regional master plan which will be designed to protect and enhance the area's resources.

HIGHLANDS UPDATES

Highlands Act Provisions

Several Highlands Act provisions are of special interest to local government. These include:

• Council Composition: The 15 member Council is appointed by the Governor, with the advice and consent of the Senate, and includes local governmental representatives. At the time of their appointment, five Council members are municipal elected officials residing in the Region and three are county elected officials.
  
  
• Transfer of Development Rights (TDR): The Council is directed to establish a TDR program. The program will identify sending zones where development is severely discouraged and receiving zones where intensive development is encouraged. Its objective is to provide some economic relief to preservation area landowners in exchange for their lost development opportunities.
  
  The Highlands Act does not mandate receiving zones; the law only authorizes the designation of voluntary receiving zones. Substantial benefits are provided to municipalities willing to accept intensive development - a minimum of five dwelling units per acre - in these voluntary receiving zones.
  
  Prior to the Highlands Act, municipalities had become increasingly wary of intensive residential development. It remains to be seen whether the statutory benefits will be sufficient to induce municipalities to accept voluntary receiving zones and the resulting intensive development. It seems unlikely that many local governments will view this arrangement as an acceptable tradeoff.
  
  
• Regional Master Plan Conformance: Following the Council's adoption of the regional master plan, preservation area municipalities will be required to revise their master plans and development regulations to conform with the state agency's plan. Unlike the TDR provisions, master plan conformance is not voluntary in the preservation area. If these municipalities do not adopt and enforce the Council's requirements, their land use authority will be taken over by the state agency.
  
  In contrast, planning area municipalities are provided with the option of revising their master plans and development regulations to conform with the regional master plan. Those that opt in will be entitled to the financial and other benefits provided to conforming preservation area municipalities. It is very likely that some municipalities will seek to qualify for this status.
  
  A high bar is established for challenges to a conforming municipality's master plan and development regulations. The municipal action will be accorded a strong presumption of validity and extraordinary deference. The objector will be required to prove its case by clear and convincing evidence.
  
  
• Capital Project Review: In the preservation area, subject to minor exceptions, capital and other projects proposed by municipalities are subject to Council approval. Within the planning area, the Council has nonbinding review and comment authority as to these projects.
  
  
• Development Review: Following the adoption of the regional master plan, the Council may review preservation area municipalities' land use decisions. If the Council exercises its call up authority, it can then approve, modify or reject the local determination.
  
  
• State aid and assistance: The Council is authorized to make grants and other financial and technical assistance available to municipalities to revise master plans and development regulations to achieve conformance with the regional master plan and implement TDR programs. Conforming municipalities will also qualify for state aid, planning assistance, technical assistance, legal representation and other benefits and incentives. Watershed aid is set at $47 per acre for municipalities that host lands subject to moratoria.
  
  
• Property Tax Stabilization: The Highlands Act established a Highlands Municipal Tax Stabilization Board to address the fiscal implications for preservation area municipalities that conform with the regional master plan. These municipalities will be entitled to state aid for a ten year period to offset the decline in the aggregate true value of vacant land due to the Highlands Act.
  
  
• The Interim Period: Prior to the adoption of highlands regulations, the DEP shall review all proposals for major Highlands development in the preservation area. Until the regional master plan is adopted, the Department of Community Affairs (DCA), in consultation with DEP, shall provide guidelines and instruction to all preservation area municipalities with respect to processing, review, and enforcement of development applications.
  
  
• COAH: The Council on Affordable Housing (COAH) is directed to consider the regional master plan prior to allocating prospective fair shares for Highlands municipalities for the period subsequent to 1999. The Highlands Act does not affect pre-adoption substantive certifications or judgments of repose.
  
  
• RSIS: Within 90 days of the Council's initial meeting, the Site Improvement Advisory Board and DCA are directed to consult with the Council and DEP concerning whether the residential site improvement standards (RSIS) are sufficiently protective for the Region, especially for the preservation area. If upgrading is necessary, the RSIS are to be modified accordingly.
  
  
• Exemptions: The Highlands Act includes 17 categories of grandfather and other exemptions. Highlands Act exempt activities must still comply with other applicable provisions of law.
  

  The Future

  The Highlands Act presents a number of challenges for local governments in the preservation area and planning area. The preservation area municipalities will be required to confront a new reality in which future development is severely limited. The choices will be more difficult for the planning area municipalities since they can decide whether, and to what extent, they wish to participate in the Highlands regulatory process.

* Lewis Goldshore, Esq., is a partner at the Lawrenceville firm of Goldshore, Cash & Kalac where he devotes his practice to environmental, land use and municipal law. Mr. Goldshore is the League's environmental counsel.