New Law Allocates New Jersey Open Space Preservation Funds

Legislation Was Recently Signed into Law That Offers Guidance for the Allocation of Funds for the Preservation of Open Space

Gov. Phil Murphy recently signed legislation into law that offers guidance for how funding for the preservation of open space, parks, farmland and historic sites should be allocated. The latest framework, which is set forth in Senate Bill 2920, increases the share awarded to farmland and historic preservation projects.

Constitutionally Dedicated Open Space Funds

In 2014, New Jersey voters approved a constitutional amendment that dedicates four percent of Corporation Business Tax revenue each year for a number of environmental programs, including open space, farmland, and historic preservation, water programs, public and private site remediation, and underground storage tank programs. The allocation for the preservation of open space, farmland, and historic sites will increase to six percent in fiscal year 2020.

The new program, which will remain in place for the next 30 years, ended the previous tax scheme under which four percent of corporate tax revenue was set aside for environmental programs. Open space preservation programs previously relied on a series of bond acts to fund the Garden State Preservation Trust Fund, which had been depleted.

Specifically with regard to open space, farmland, and historic preservation, commencing July 1, 2019 (i.e., for State fiscal year 2020 and thereafter), of the six-percent CBT dedication, the State Constitution dedicates annually 78 percent for the following purposes:

• Providing funding, including loans or grants, for the preservation, including acquisition, development, and stewardship, of lands for recreation and conservation purposes, including lands that protect water supplies and lands that have incurred flood or storm damage or are likely to do so, or that may buffer or protect other properties from flood or storm damage (i.e., Green Acres and Blue Acres);
• Providing funding, including loans or grants, for the preservation and stewardship of land for agricultural or horticultural use and production (i.e., farmland preservation);
• Providing funding, including loans or grants, for historic preservation; and
• Paying administrative costs associated with each of those efforts.

Senate Bill 2920 Allocates Open Space Funding

While the constitutional amendment ensures continued funding, there is less money to go around. Senate Bill 2920 provides guidance regarding how open space funds will be divvied up going forward.  For State fiscal year 2020 and thereafter, CBT revenues would be allocated as follows:

• Sixty-two percent for the acquisition and development of lands for public recreation and conservation purposes, including lands that protect water supplies and lands that have incurred flood or storm damage or are likely to do so, or that may buffer or protect other properties from flood or storm damage;
• Thirty-one percent for farmland preservation purposes; and
• Seven percent for historic preservation purposes.

The new law provides further guidelines with respect to each purpose. Of the funding allocated each year for recreation and conservation purposes pursuant to this bill: 60 percent would be used for State open space acquisition and development projects; 30 percent would be used for grants and loans to fund local government open space acquisition and development projects; and 10 percent would be used for grants to fund open space acquisition and development projects undertaken by qualifying tax-exempt nonprofit organizations.

With respect to funding for State open space acquisition and development projects: 45 percent would be used for acquisition projects, including Blue Acres projects, and 55 percent would be used for development projects (the funds were divided equally under prior law). Of the funding for State open space acquisition projects, a minimum of 10 percent would be allocated for Blue Acres projects. In addition, of the allocated funding for open space acquisition and development projects by local government units, up to 10 percent would be used to fund stewardship activities, rather than up to two percent as provided by current law.

With regard to farmland preservation, Senate Bill 2920 amends the current law to provide that, for State fiscal year 2020 and thereafter, of the moneys allocated for farmland preservation, up to four percent (an increase from three percent) may be used for stewardship activities on preserved farmland. It also amends the definition of stewardship activity to include projects that improve the resiliency of farmland soils. In addition, the new law provides that stewardship activities undertaken on farmland on which (1) the pinelands development credits have been acquired pursuant to the “Pinelands Protection Act,” and the pinelands comprehensive management plan adopted pursuant thereto, or the development rights have been acquired pursuant to a transfer of development rights program for the Highlands Region established pursuant to the “Highlands Water Protection and Planning Act,” and (2) there is a deed restriction approved by the SADC, would be eligible to receive funding from the SADC.

Future Allocations of New Jersey’s Open Space Funds

Beginning July 1, 2022, and annually thereafter, the new law directs the Garden State Preservation Trust (GSPT) to review the appropriations of constitutionally dedicated CBT moneys to, and the expenditures thereof by, the Department of Environmental Protection (DEP), State Agriculture Development Committee (SADC), and New Jersey Historic Trust (NJHT) for their respective programs. A recommendation by the GSPT, however, would not alter the program funding allocations unless authorized by the Legislature.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.