In the 1970’s, I remember when Brendan Byrne was running for Governor and had law partner, Marty Greenberg, asked me to form a committee called “Builders for Byrne” to support Brendan’s campaign. No sooner did Byrne become Governor then he gave New Jersey its first Department of Environmental Protection, resulting in numerous calls from my clients asking how did this happen? This regulation of the real estate began for real. The MLUL was followed by the Highlands Clean Water Act (Wetlands), ECRA, Meadowlands, Pinelands, etc.
Fast forward many years, there is now a new burden that has been adopted by almost every municipality in North Jersey called the Certificate of Continuing Occupancy. It is being used in multiple ways by towns to control, delay and hinder re-renting industrial, retail, and even office buildings. Here are three examples in three different real estate matters that I have encountered this year.
A client of ours owned a food anchored shopping center where the supermarket of approximately 25,000 sq. feet went dark and closed down. The zoning in the municipality permitted a medical use because the property was located in the Central Business District. Nevertheless, because the medical use was larger than anticipated, the municipality made the property owner and the hospital, which intended to use the premises as an adjunct medical facility for its patients so that they did not have to go to the hospital for one day treatments and examinations. It took three meetings before the Board of the Adjustment to secure a “Use Variance” even though the use was permitted. The Applicant was successful by a 6 to 2 vote to secure a Certificate of Occupancy.
In another community where I was waiting to represent our case for a CCO for a proposed tenant in a shopping center before the Planning Board, a principal of an accounting firm appeared before the Planning Board to request a Continuing Certificate of Occupancy to occupy a 5,000 sq. foot office in an office building located in a office park in the community. He testified before the Planning Board that his accounting firm was going to occupy the same offices as a former law firm had occupied and not change any of the internal offices and move in without any alterations whatsoever. At that point the Chairman informed him that he could not present his case because he was an LLC and was not represented by an attorney. The accountant then informed the Chairman that it was moving in the next day and all of his computers, furniture, etc. was on a moving truck ready to be unloaded the next day. The Chairman informed him that even though there were no changes to the facilities that it was occupying, he could not be heard because he was an LLC and was not represented by an attorney. The next case was called, and the accountant departed the premises. Fortunately, I caught him on the first floor of the building and advised him that I would represent him for no charge, and we went back before the Planning Board and after some testimony, he was granted the elusive Certificate of Continuing Occupancy.
In another municipality, an owned shopping center that had an empty store formerly occupied by a camera store, its new tenant wished to put in a Federal Express office with no changes whatsoever to the interior. Once again, the client was required to go before the Planning Board to get a Certificate of Continuing Occupancy.
The CCO is not nearly confined to offices and retail but also to large industrial buildings. Recently, a client was selling a large industrial building where it was a distributor of a large assortment of products. It sold the building to another distributor of products and once again the building required inspections by fire officials, the police department, the zoning officer, together with completion of an application and hearing before the Planning Board to get Certificate of Continuing Occupancy.
The result of all of this is that owners and their tenants need to spend needless monies for various professionals, appear before the Land Use Board and sometimes for more than one meeting. As a result, property owners suffer needless delays with its vacant space and sometimes even a proposed tenant is turned off and does not go forward when it understands the procedure and the delays that it will encounter. The municipality under its “police powers” maintains that it has a right to review and understand the tenants that are coming into its community. However, the municipal land use law basically states that this process shall only be used for purposes of an amended site plan or when a proposed use raises an issue about the Town’s on-site parking requirements.