N.J. Admin. Code § 19:35-6.1

Current through Register Vol. 56, No. 21, November 4, 2024

Section 19:35-6.1 - Temporary use and/or occupancy of SDA-owned real property

(a) The SDA may, in its sole and absolute discretion, authorize the temporary use and/or occupancy of all or any part of SDA-owned real property, whether or not the same is deemed to be surplus real property, for the period of time during which such real property will not be needed for a school facilities project, or is not used, or otherwise useful, in the business operations of the SDA.

(b) Authorization pursuant to this section shall be memorialized in a written agreement including, but not limited to, a lease, license, and/or use and occupancy agreement, executed by the SDA's Chief Executive Officer, or his or her designee, that incorporates the terms and conditions of the proposed use as determined by the SDA, and that, in every instance, shall contain the following general conditions:

1. The duration shall not extend beyond the point in time when the real property will become necessary for the implementation of a school facilities project(s) or otherwise necessary for the SDA's execution of its responsibilities under the Act;

2. The duration shall not exceed a total term of three years, inclusive of the initial term and any optional extension(s), unless approved by the SDA Board. Any extension or renewal of a temporary lease, license, or use and occupancy agreement originally authorized by the SDA's Chief Executive Officer must be approved by the SDA Board if the resulting renewal or extension will result in a total term exceeding three years;

3. Any agreement for a duration of more than 30 days, with the exception of a post-closing lease or use and occupancy agreement to a seller or a seller's tenants in connection with an acquisition of real property by the SDA, shall specify that the SDA has the unilateral and absolute right to terminate the agreement for any reason upon such notice, as the SDA deems appropriate.

4. The user(s) shall not alter the real property in any manner that, in the sole judgment of the SDA, might negatively impact the amount of proceeds realized by the SDA in any subsequent disposition of the real property and/or result in additional costs to the SDA (including, without limitation, additional demolition costs and/or trash disposal costs) with respect to the property's fitness or suitability for subsequent use of the real property for school facilities purposes;

5. The use or user shall not impact environmental conditions at the property;

6. The user must accept the real property in "as is, where is, with all faults" condition. No alterations or improvements of any kind are permitted, unless upon the prior written consent of the SDA in each instance; and

7. Holdover charges, in an amount to be determined by the SDA, shall be due and payable in the event the user fails to surrender the real property on the date that the right of such temporary use of the property expires.

(c) If the use agreement is with a non-public and/or private party, and is for a use that is not a public purpose or a charitable purpose, in addition to the general condition requirements of (a) above, the agreement shall, at a minimum:

1. Require that the proposed use or occupancy of an SDA-owned property must be cleared and approved by the SDA's bond counsel, engaged to provide legal advice to the SDA regarding the bonds authorized pursuant to section 25 of P.L. 2007, c. 137 (N.J.S.A. 18A:7G-14) to fund the activities of the SDA, and the tax treatment of the interest on such bonds, to ensure that the proposed use or occupancy will not have an adverse effect upon the tax-exempt status of the bonds, as set forth at N.J.A.C. 19:35-1.1, with the exception of a post-closing lease or use and occupancy agreement to a seller or a seller's tenants in connection with an acquisition of real property by the SDA, which shall not require prior bond counsel approval if the lease or use and occupancy term is for less than six months;

2. Require payment of consideration in an amount that is not less than the fair market rental value of such use, as determined by the SDA pursuant to an independent appraisal or in-house valuation based upon relevant information, as appropriate;

3. Prohibit the user from assigning its rights to such use or subletting, or otherwise allowing another person or entity to use and/or occupy the subject real property without the express written consent of the SDA;

4. Require any such user to pay all costs associated with its use and/or occupancy of the real property, including, but not limited to, the costs of operating and maintaining the real property, payment of any taxes (real estate and otherwise) relating to the real property, the cost of providing security services to such real property, and all amounts payable with respect to utilities and services furnished to such real property;

5. Require such user to provide insurance coverage during the term of its use of the real property of a minimum of one million dollars in liability insurance, with the required amount determined by the SDA based upon the intended use and/or occupancy of the property, unless the user is a nonprofit or public entity that can demonstrate non-insurance resources sufficient to finance the indemnity obligations at (c)6 below; and property insurance for improved property in an amount equivalent to the replacement value of the improved property;

6. Require such user to indemnify, defend, and hold the SDA harmless against any bodily injury, losses, and/or damages that result, either directly or indirectly, from such use and/or occupancy; and

7. Require such user to maintain a security deposit with SDA in amounts determined based on the value of the property; the nature and duration of the intended use and risk of damage to the property as a result of such use; the cost of property maintenance for the property; or a combination of these factors.

(d) If the use agreement pursuant to this section is with a public party, or a non-public, non-profit party, and the proposed use will serve either a valid charitable purpose or public purpose and will not result in the generation of income or profit, the agreement is not required to include consideration at fair market value, but, in addition to the general condition requirements set forth at (b) above, the agreement shall, at a minimum:

1. Identify the proposed use and define the charitable purpose or public purpose or governmental function or program, that is supported by the proposed use;

2. Require documentary proof that the proposed use has been approved through official action (for example, corporate resolution, board action or minutes, memorandum of agreement, or other documented official action) of the public party or nonprofit entity;

3. Provide for consideration that recognizes the value of the public benefit of the proposed use as a component of the consideration;

4. Require the public party or non-public, non-profit party seeking to use the property for a charitable purpose or public purpose to pay all costs associated with its use and/or occupancy thereof, including, but not limited to, operation, security, taxes, utilities, and maintenance, which must include landscaping and snow removal;

5. Prohibit the user from assigning its rights to such use or subletting or otherwise allowing another person or entity to use and/or occupy the subject real property without the express written consent of the SDA;

6. Require the user to provide insurance coverages during the term of its use of the real property in amounts to be determined by the SDA; and

7. Require the user to indemnify, defend, and hold the SDA harmless against any personal injury, losses, and/or damages that result, either directly or indirectly, from such use and/or occupancy.

(e) The SDA shall prepare a semi-annual informational report, to be submitted to the SDA Board, listing all current temporary use and occupancy authorizations, whether memorialized in leases, licenses, or use and occupancy agreements, and indicating any extensions or renewals thereof.

N.J. Admin. Code § 19:35-6.1

Adopted by 54 N.J.R. 647(a), effective 4/4/2022