Michael J. Lipari, Esq.
Hill Wallack LLP

As a result of the lengthy recession, it has been increasingly difficult for developers to deal with the high costs of obtaining project approvals and secure project financing.  Lending institutions are hesitant to provide financing without assurances that projects will remain viable over time.  New legislation, known as the “Vertical GDP” law, allows developers to obtain general development plan (GDP) approvals for projects typically located in more urban and developed areas of the State.  

Developers have long had the option under the Municipal Land Use Law (MLUL) to seek GDP approval on sites of 100 acres or more, in order to acquire “vesting” protection against a rezoning lasting up to 20 years.  The Vertical GDP legislation extends these protections to projects with a nonresidential floor area of 150,000 square feet or more, or with 100 residential dwelling units or more, on sites of 100 acres or less.  Mixed-use projects also qualify if the project consists of a combination of square feet of nonresidential floor area and residential units that, when proportionately aggregated at a rate of 1,500 square feet of nonresidential floor area to one residential unit, is equivalent to at least 150,000 square feet of nonresidential floor area or 100 residential dwelling units.  

The Vertical GDP law addresses the costly and time consuming urban development process resulting from land assemblage issues, environmental clean-up, decreased absorption rates and difficulty obtaining financing.  Since the development application and construction process may extend over many years, it is also possible that the views of elected officials or the planning board may change, and extended vesting against zoning changes resulting from a GDP approval can protect against that risk.

The inability to obtain financing can also stop potentially lucrative development projects dead in their tracks.  Acquisition of GDP approval provides a developer with added security early in the approval process, with vesting protections allowing lenders to know that a subsequent zoning change will not halt the project.

Additionally, GDP applications can be quite flexible, setting forth only the general location of the various uses on the site along with the number of dwelling units or nonresidential floor space.  The plans need not include the details that often become a trigger for local opposition, such as lighting, the location of dumpsters, and the like.  A GDP application also allows a developer to acquire useful feedback from the board and the public, enabling the developer to redesign the project early before spending money on detailed plans and engineering.

Although a GDP application does carry risks, it provides a developer more time to overcome obstacles that could otherwise halt the project.  The Vertical GDP legislation now offers the same protections to smaller projects typically found in smart growth and urban areas.  Developers are well-advised to take advantage of the new form of GDP approval.

Michael J. Lipariis an associate of Hill Wallack LLP and a member of the Land Use Solutions Practice Group. Mr. Lipari concentrates his practice in the land development application and permitting process and in the litigation of land use matters. Mr. Lipari also litigates complex real estate contract disputes on behalf of individuals, developers and community associations. He can be contacted at 609-734-6313 or mlipario@hillwallack.com. Visit www.hillwallack.com for more information on the services offered by its Land Use Solutions Practice Group.