The New Jersey commercial real estate industry is preparing for big statewide permitting changes slated to come into effect this summer. Under its controversial Resilient Environments and Landscapes (“REAL”) Rule, aimed to address risks associated with projected sea level rise and increased frequency and severity of flooding events, the New Jersey Department of Environmental Protection (“NJDEP”) seeks to impose significant new stormwater and other requirements on many projects. In some cases, insurmountable regulatory hurdles or economic constraints may even render projects infeasible.
NJDEP originally posited the REAL Rule as affecting only coastal areas, but then broadened the reach of many restrictive requirements of the REAL Rule – most importantly stormwater requirements – to properties everywhere in the state.
The end result is many commercial real estate projects – development, redevelopment, improvements, and conversions of office, retail, warehouse, industrial, mixed use, affordable housing, hospitals, schools, and more – throughout New Jersey are staring down the barrel at potentially game changing permitting requirements in the coming months.
Here are threshold questions to help evaluate whether and to what extent your project may be affected.
Question One: Is the property located in a currently regulated or soon-to-be newly regulated area?
The REAL Rule is more than 1,500 pages worth of changes to NJDEP’s land use regulatory programs – coastal, wetlands, flood hazard, stormwater, etc. A significant piece is the expansion of flood hazard jurisdictional areas across the state, as well as the creation of new jurisdictional tidal areas that will be called the “Inundation Risk Zone” and the “Climate Adjusted Flood Elevation.” Keep in mind that tidal areas don’t just include typical coastal areas such as Atlantic City or LBI, but also major cities and suburbs along rivers with riparian tidal zones such as Jersey City, Hoboken, Newark, Trenton, Camden, and others. Projects in urban and suburban areas, including infill development, could easily end up subject to the new rule. NJDEP launched a flood jurisdictional mapping tool to assist with initial assessment, but it is not conclusive for regulatory purposes and is reportedly subject to updates without notice. Consult with your engineer and legal counsel for reliable jurisdictional determinations.
Question Two: If the property is subject to the upcoming REAL Rule, are the anticipated new requirements even feasible?
The devil is certainly in the details on this one. Depending on the regulated areas of the property, the REAL Rule may impose new obligations regarding the quality and quantity of stormwater discharges, conducting alternatives analysis, evaluating offsite conditions, imposing wetland mitigation and buffer conservation restrictions, addressing access road elevations, etc. If you are at this point of the analysis, your engineer and legal counsel will be able to advise on projected impacts on feasibility, marketing, leasing, financing, and other project and deal critical issues.
Question Three: How can I protect against potentially significant impacts to my project or business posed by the REAL Rule?
If you are concerned, you are not alone. Multiple industries and interest groups submitted comments to the REAL Rule before the comment period closed in late 2024. You can still support your company’s and industry group’s lobbying efforts for sensible regulation. For any specific project currently under consideration or in development, consult with your engineer and legal counsel about your ability to submit a complete application for grandfathered (now called “legacy” under the REAL Rule) status. More details on protecting your project to follow in a separate posting.
