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news release

P.O. Box 600
Trenton, NJ

Contact:
Lawrence Ragonese 609-292-2994 or
Lawrence Hajna 609-984-1795 (DEP)
Joe Dee or Tim Greeley 609-530-4280 (NJDOT)

RELEASE: August 18, 2011

 

Christie Administration revamps lease process
for state lands; ensures consistent method to
minimize environmental impacts and ensure fair compensation to the state

(Trenton) - DEP Commissioner Bob Martin and NJDOT Commissioner James Simpson today unveiled a comprehensive set of guidelines that revamps and modernizes New Jersey's policies regarding the leasing of State lands. It creates a fairer, simpler and consistent process that will minimize environmental impacts while ensuring the State is fairly compensated for leases, particularly from private utilities that run pipelines, cables, transmission lines and telecommunications towers across or under hundreds of miles of State-owned land and water.

The new policy, to be adopted by all State agencies, rectifies inconsistent policies and fee schedules that are outdated and prevent the State from realizing fair compensation for legitimate private use of State land, much of which has been preserved as open space, wildlife habitat, or for recreational use.

The new policy will be more efficient and less expensive for State agencies to implement, will ensure that taxpayers receive fair market value for these leases, and will allow businesses to know with certainty what leases will cost.

The guidelines come from an interagency panel convened last year in the wake of the Tennessee Gas Company's pipeline lease. That lease was drawn up by the DEP and amended and approved in July 2010 by the Statehouse Commission, based on policies that had not been updated or restructured for decades.

"The State's process for valuing leases was long overdue for a major overhaul,'' said DEP Commissioner Bob Martin. "This is our opportunity to bring this system up to date, to provide more predictability for business and to get the best deals and most fair compensation for the people of New Jersey.''

"Our top priorities at DEP are protecting the State's air, water, land and natural resources, and that includes safeguarding our State parks and natural lands -and this policy will discourage traversing those lands when there is a viable alternative,'' Commissioner Martin said. "But when those lands must be used for purposes that serve the public interest, we must get compensation appropriate to the value of the use, while also being fair to businesses and entities that need to cross State-owned property.''

The DEP alone owns 800,000 acres of parks and fish and wildlife habitats that are crossed in many areas by utility lines.

Commissioners Martin and Simpson said an improved process would allow businesses to better predict and understand costs associated with leasing State lands. The new guidelines also will encourage businesses to minimize any potential environmental impacts.

"The use of a square footage-based rate provides a strong financial incentive for sponsors of linear projects through preserved lands to reduce their environmental footprint, which will lead to reduced impacts to our land and water resources,'' said Ben Witherell, DEP Director of Economic Analysis and chairman of the interagency work group that considered the issue.

In addition to compensation for leasing property, businesses and utilities that cross State lands also provide substantial non-monetary compensation to the State, such as replacement of disturbed lands and reforestation.

Most of the new guidelines will be implemented by State agencies immediately. Key points:

  • Appraisals of State land for the purposes of valuing private use leases will consider the intended use of the land.
  • No new "in perpetuity'' leases will be issued.
  • All leases, especially those with renewal clauses, will include an annual inflation adjustment of at least 2.5 percent.
  • Linear corridor leases for projects such as pipelines and power lines will be assessed annually at a rate of $0.15 per square foot in upland areas and $0.10 per square foot in tidelands rather than the current method of individual appraisals for each parcel intersected by a project. That would be comparable to rates in other Northeast or Mid-Atlantic states.
  • A greater share of the revenue generated by leases will be dedicated to the program or agency responsible for managing those leases.
  • Management of billings and collections for leases on State land will be centrally coordinated or outsourced to a property management company, to increase efficiency and cut costs.
  • Telecommunications tower and antenna right-of-way leases will be consistently valued across all State agencies, based on prevailing market conditions.
  • Per acre shellfish harvesting lease rates will increase. Many have not risen in decades and do not adequately fund the management and assistance provided by the State to the shellfish industry.
  • The Department of Transportation will establish occupancy lease rates for private use of its right-of-ways.
  • Current methods that are working well will be continued, such as publicly bidding farm leases on DEP-owned land when it is consistent with the Department's mission and market-based leases of office and commercial space by the New Jersey Economic Development Authority.
    The report does not make specific recommendations related to mitigation for environmental damage or interagency coordination related to large linear corridor projects, but lays out a framework to address these issues in a forthcoming report.
    The scope of the report on the new guidelines includes evaluations of and recommendations for six major categories or types of leases the State holds: tidelands; linear corridors; publicly bid, market-based, and nominal fee leases; telecommunications towers/antennae; leases related to aquaculture; and leases related to State roads and highways.

The report identifies key principles for leasing State land, guidance on appraisals related to valuing leases of State land, and a framework for improved coordination of project review and mitigation related to large linear corridor projects that fall under the jurisdiction of multiple agencies and programs.

Other recommendations are aimed at upgrading management systems for the inventory of leases, and dedicating a sufficient portion of revenues from leases of State land to programs responsible for maintenance and upkeep of lease-impacted State parks and wildlife areas.

The report was prepared by a working group including members from the DEP, DOT, Board of Public Utilities, Economic Development Authority, State Treasurer's Office, Department of Agriculture, Office of Consumer Affairs, Pinelands Commission, State Agriculture Development Committee, New Jersey Water Supply Authority, and the Highlands Council.

To read the full report visit: http://www.nj.gov/dep/docs/landlease110817.pdf

 
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  Last Updated:  August 19, 2011