How A Major Bill Became A Law: The Highlands Act

Wednesday, September 1, 2004 - 01:00

Editor: Please tell us about your background.

Racioppi: I specialize in a rather broad practice of real estate, including a transactional practice as well as real estate related litigation. This includes contracts of sale, zoning and leasing, as well as real estate finance. I've been an attorney since 1988, having graduated from NYU Law School.

Editor: Please describe your involvement with the Highlands Bill, which would preserve the last remaining large expanse of mountain lakes in New Jersey, protecting the water supply.

Racioppi: Our involvement was in representing the New Jersey Bankers Association and various real estate developers in monitoring the bill as it made its way through the legislature and in one instance having the bill amended. We represented a utility company in having amendments made to the bill which would allow the company to continue to maintain its operations in the Highlands area.

Editor: Please give us some background as to the motivating factors that brought about this legislation.

Racioppi: That depends on which camp you're in. If you're in the pro development group (made up of real estate development interests), you would say that the motivating factor was to stop development and to do whatever you could to use the Highlands Bill as a tool to stop development. If you are in the conservationists group, you would say that the motivating factor was to protect the water supply. The true motivating factors are probably somewhere in the middle of what the two groups would have you believe.

Editor: Was the bill ultimately a compromise between the two factors?

Racioppi: As with any bill there was some give and take. I think if you look at the Highlands Bill which was paired with the Fast-track Development Bill, it certainly was a compromise but remains largely a conservationist piece of legislation. The Bill was signed on August 9, 2004 by Governor McGreevey. The Fast-track Development Bill was signed earlier.

Editor: What was the primary orientation of the members of the Governor's Task Force that brought forth the bill?

Racioppi: The Task Force was made up largely of conservationists and local government officials with one or two representatives of developers in attendance.

Editor: Why was it necessary to pair the Highlands Bill with the Fast-track measure to get it through the legislature?

Racioppi: Before the Highlands Bill could be presented to the legislature, it needed to be approved and released by a majority of the members of the Senate Environment Committee. There was a compromise, the decision being to approve the Fast-track bill prior to approval of the Highlands Bill in order to appease the more pro-development, as well as some South Jersey, legislators. It was a necessary compromise; otherwise the Highlands Bill would have never been approved or released from committee. It was an unusual procedure since normally there are trade-offs which senators lobby for within the text of one bill. Here it was necessary to pass an independent bill prior to passage of the Highlands Bill.

Editor: Why would the South Jersey legislators be opposed to the Highlands Bill?

Racioppi: Because this Highlands Bill is going to cost money. It costs money to restrict property and to develop manpower to regulate it. Southern legislators weren't sure they wanted to allow that much of the state's budget to be spent in Northern New Jersey.

Editor: Would they not benefit from the watershed?

Racioppi: There are some arguments that they do, but it certainly benefits the Northern New Jersey water supply more than Southern New Jersey.

Editor: Could you talk about some of the provisions in the Fast-track bill? Is it not likely to undergo a constitutional challenge since there is no appeal from an administrative judge's ruling and it furthermore circumvents challenges at public hearings?

Racioppi: In theory, the Fast-track bill is rather simple in that it speeds up the time for getting many of the governmental permits and approvals you need from various agencies in order to proceed with development. These approvals become automatic after 45 days have elapsed. In my opinion, should such a constitutional challenge occur, the government would be successful in defending the challenge. There are similar provisions in other legislation.

Editor: Have there been similar tradeoffs between the environmentalists and the developers on other measures?

Racioppi: In every development bill, there are tradeoffs. What makes this situation unique is that there were two separate bills to placate both groups, rather than tradeoffs within an existing bill. I can't think of any other pieces of legislation on this scale splitting the tradeoffs between the environmentalists (or preservationists) and the developers to the extent that occurred in this instance.

Editor: Under the Highlands Bill, the preservation area is recommended to be 350,000-390,000 acres. What are the pros and cons to consigning so much land to watershed or preservation purposes?

Racioppi: Obviously, the pro is that it will improve the water supply. There are, however, a number of cons. First, it is going to cost a tremendous amount of money to restrict this amount of property and provide for its regulation under the enforcement provisions of the Highlands Bill. Second, the municipalities will lose tax ratables because the property that could have been developed to provide tax ratables will not be developed. There's also a decent potential for lawsuits concerning the restrictions on development as well as the claims of a taking without compensation. Property owners may allege that they are denied the full value of their properties because they are restricted in their usage by their location within the Highlands area. This is a constitutional challenge that may arise from the Highlands Bill. There is a process in the Highlands Bill for voluntary purchases of development rights; nevertheless, someone who believes that their property now is unjustifiably restricted may claim that this provision represents a taking without compensation and that they could have made a lot more money for the property had it not been within this area. The Bill also does not address affordable housing obligations. Finally, with any land use restriction on this scale, the pro-development camp would argue that the restrictions go much too far and are too restrictive and over-inclusive, such as the provisions concerning buffers and the three percent impervious coverage (i.e., does not absorb precipitation) limit and those requiring all projects of one acre or more or projects with a quarter acre of impervious coverage to comply with the Act.

Editor: Isn't there provision for fair evaluation in today's market?

Racioppi: The state is not going to purchase the entire Highlands preservation area, so there are going to be claims by those who do not have their properties purchased that they've lost value in the land.

Editor: Do you agree with the Task Force's proposal to set up a regional counsel to oversee the Highlands area?

Racioppi: I do. I think this is the only way that the purpose of the Act can be effectuated; otherwise you might have inconsistent decisions and codes by the individual municipalities. This is much like the Pinelands and the Hackensack Meadowlands Development Commission (HMDC), which have previously been set up as regional authorities. If your objective is to protect the water supply on a regional basis, then you need a regional counsel to do that and prevent inconsis-tent regulations within the local municipalities