Perspectives

By Susan Rubright

Taking Stock

Deemed by some to be the worst economic crisis since the Great Depression, today's economic environment places many real property owners and developers in a miasma of doubt. Doubt, and uncertainty in general, tends to have two primary effects—paralysis or panic. Neither reaction is conducive to the maximization or the protection of an asset, and both can lead to lost opportunities. Developers and property owners, therefore, must position themselves in a calculated fashion to seize opportunities when they arise. After all, if great difficulty leads to opportunity, then great opportunity is around the corner.

So, how can developers and real property owners position themselves to maximize their current real property interests? Taking stock of what you own and researching what is happening around you are good places to start. It is also critical to watch what others near you are doing, and what the municipality may have in mind with regard to changes to its land use policies.

Review, Examination & Maximization

Developers and real property owners must study the land use policy landscape prior to taking action. Read the applicable municipal master plan, re-examination reports and any redevelopment plans. You should also see if there are any new zoning ordinances being proposed that will affect your property or that could make other properties attractive acquisitions.

Next, engage the municipality in a working dialogue. This type of exchange can lead to comprehensive planning, rezoning or redevelopment that involves your property. Look to see if you can help the municipality achieve its planning goals. For example, during periods of downturn, municipalities have more time to address planning and development issues due to a reduced development application review workload. Property owners and municipalities alike may see an opportunity for cooperation. Does the municipality now have time to focus on a plan to redevelop or rezone any under utilized sites you have and work with you on achieving a viable redevelopment plan that benefits you and the community? Ultimately, if a developer's plan is reasonable and positioned with an eye towards benefiting the municipality in some way there is a greater likelihood of implementation.

A development infill, the use of vacant or dilapidated buildings within a built-up area for further construction or development, is another example of how a property owner can upgrade an asset while working with a municipality to plan for the future.
Of course, the situation often arises where the municipality is not willing to work with a developer in an effort to plan for the future. In some instances a builder can accomplish a development goal by positioning himself to "remind" a municipality of its obligations, such as the constitutional obligation to zone for affordable housing. A developer can position itself for an opportunity to maximize its property by showing how it can assist in satisfying this obligation either by seeking to provide an inclusionary project or by filing a Builder's Remedy lawsuit if the municipality has not complied with COAH.

Protectionist Measures

Often one person's plan of real property asset management and maximization can lead to another person's asset devaluation. As a result, protectionist measures are called for. Neighboring landowners are, at an accelerated rate, engaged in confrontation due to conflicting property interests. These confrontations are a byproduct of some individuals seeking to protect their assets while others often try to squeeze what they can out of theirs.

One situation occurring with increasing frequency is the conversion and rental of accessory spaces in single-family residential zones. Although such a maneuver maximizes the use and income of one property, it negatively impacts the neighborhood, and the entire community, as it undermines the zone plan. A use change such as this may result in excess noise, garbage, and traffic. In turn, such a change will negatively impact a neighborhood vis-à-vis decreased desirability. Objections to this kind of proposed maximization must be voiced.

Protective measures can also be called for in the context of proposed structural changes that impact the use and enjoyment of neighboring property owners. For example, a proposal to add a second story for apartment use above a retail use in a downtown area could be a permitted use and conform with all or most planning and zoning requirements. However, if that addition is constructed such that it also happens to block the windows of the building next door, and limits or eliminates the neighbors' views, light and air, that property owner must protect his asset and value by objecting to his neighbor's proposal.

A property owner must review legal notices, legal ads, websites and "keep his ear to the ground" if he is to know about "improvements" being proposed by his neighbors. This applies to the proposals just discussed as well as to those that, for example, involve the construction of off-tract improvements that could impact an entire apartment complex or an office building you own. If an adjacent property owner wants to improve an intersection (or make other improvements) near your property, make sure your own access, water, drainage and buffers will not be negatively affected and that you have input so your asset is protected.

Filling real estate tax appeals are another protective property measure. Although this legal strategy is not new, due to the present economy, the practice of real estate tax appeals has recently surged. A successful tax appeal is an example of a both protecting your real property assets while maximizing your tax savings.

Conclusions

• The current economic down-turn is an opportune time to take an inventory of your real property assets and to access what opportunities are available.
• Look for opportunities to work with municipalities to enhance your properties, and to make the community better.
• Watch out for how others may be trying to maximize their own assets in ways that could have a detrimental impact on your property.
• It is equally as important to maximize your own assets as it is to make sure that you protect your property from others who may be trying to do the same thing!

By Susan R. Rubright, member, and Chad D. Ehrenkranz, associate, of the real estate, environmental and land use practice groups of Brach Eichler L.L.C. in Roseland, NJ. Contact Ms. Rubright at srubright@bracheichler.com.

• Perspectives | Leave a comment • Email Article