S 1766 — Authorizes conversion of certain office parks and retail centers to mixed-use developments.

S1766 2R3R [Second[Third Reprint] SENATE, No.

Senators ZwickerZwicker, Mukherji and MukherjiTimberlake         SYNOPSIS      Authorizes conversion of certain office parks and retail centers to mixed-use developments.

  CURRENT VERSION OF TEXT      As amended by the Senate on MayJune 28,18, 2026.

   An Act concerning the conversion of certain office parks and retail centers to mixed-use developments and3[and] ,3 supplementing chapter 55D of Title 40 of the Revised Statutes.Statutes 3, and amending P.L.1991, c.4313.

     a.    a.    New Jersey is one of the most suburban states in the country.

     c.    c.    While, for decades, large retail centers and office parks provided economic and social benefits to New Jersey and its residents, their prevalence has been in sharp decline based on economic influences, consumer preferences, and retail and business alternatives.  Many of these declining large retail centers and office parks are dated or vacant, such that academics and planners have deemed them to be "stranded assets."      d.    Workers and employers want to be located in mixed-use communities, which offer easy access to a range of residential, commercial, and recreational spaces and amenities within walking distance of each other.  Converting stranded office parks and retail centers into desirable mixed-use communities would promote the general welfare by revitalizing underused or underperforming properties, creating new opportunities for housing, businesses, and recreational facilities, and bolstering the economic and social vitality of New Jersey’s municipalities.       e.    e.    One significant impediment to converting stranded retail centers and office parks into dynamic mixed-use communities is the application of outdated, rigid municipal zoning regulations that often separate residential and commercial uses from each other.

       2.    a. a. As used in this section:

 As used in this section:

        1"Mixed-use zone" means any zone, district, or overlay within the municipality that permits a mix of residential and commercial uses, including retail and offices.1      "Office park" means a non-residential land use developed as a single entity combining general, business, professional, or medical offices that contain ancillary personal services primarily for employees located on a single sitesite 1, 1, or located onon one one or more contiguous tax lots,1lots,1 and and planned, developed, and managed as a unit.

     "Retail center" means a non-residential land use developed as a single entity combining retail stores and potentially other commercial uses located on a single sitesite 1, 1, or located onon one one or more contiguous tax lots,1lots,1 and and planned, developed, and managed as a unit.

     b.    A municipal planning3[planning] land use3 board 3or the appropriate municipal land use approval authority3 enforcing municipal zoning regulations shall permit conversions or partial conversions of eligible properties into mixed-use developments pursuant to the provisions of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).

     c.    c.    A developer of a proposed project to repurpose or redevelop a retail center or office park into a mixed-use development in accordance with the provisions of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) shall demonstrate that the retail center or office park located on the lot or land included in the application for development meets the following requirements to be deemed an eligible property:

     (1)  (1)  the office park is at least 50,000 square feet or the retail center is3[is] contains, or previously contained, a single unit of retail space of3 at least 15,000 square feet;

     (2)(2)  (a) the office park or retail center has a vacancy rate of at least 25 percent for a continuous period of at least 18 months immediately preceding the application for development;

or      (b)  (b)  the office park or retail center has suffered an economic downturn over the three-year period immediately preceding the date of the application, as demonstrated by evidence of a quantifiable loss in revenue such that the developer’s expenses for the premises have exceeded revenues by 30 percent or more each year;

and      (3)  (3)  the owner of the property has made and maintained a continuous, good faith effort to redress the vacancy, actively rent, or actively market the property during the 18 months immediately preceding the application for development.

     (1)  (1)  the mixed-use development, which may include the demolition of existing structures,structures 3in accordance with the State Uniform Construction Code’s demolition permit requirements3, complies with the zoning requirements applicable to development projects within the municipality’s mixed-use zone as provided in subsection e.

     (2)  (2)  the application proposes to develop at least two types of uses as part of the mixed-use development, of which one use is residential, and no use shall be industrial;

     (3)  (3)  at least 20 percent of the residential units to be constructed shall be reserved as or very-low income housing, low-income housing, or moderate-income housing, as those terms are defined in section 4 of P.L.1985, c.222 (C.52:27D-304);

     (4)  (4)  of the residential units reserved as very low-income housing, low-income housing, or moderate-income housing, at least 50 percent within each bedroom distribution are low-income units, and at least 13 percent of the low-income units are very-low income units;

and      (5)  (5)  the residential units reserved as very low-income housing, low-income housing, or moderate-income housing comply with the Uniform Housing Affordability Controls, adopted to implement P.L.1985, c.222 (C.52:27D-301 et seq.).

     e. e.    (1) (1) The The municipal planning3[planning] land use3 board 3or the appropriate municipal land use approval authority3 shall approve an application to repurpose or redevelop an eligible property into a mixed-use development notwithstanding the eligible property’s location in the municipality if the project complies with the zoning requirements applicable to projects within the municipality’s mixed-use zone. zone. If the municipality has multiple mixed-use zones in its zoning ordinance, the municipality shall designate which of its mixed-use zones’ regulations shall apply to mixed-use developments that meet the requirements of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).  1This subsection shall only apply to mixed-use zoning ordinances adopted prior to the enactment of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).  The Department of Community Affairs shall develop Statewide baseline density and bulk standards that shall apply to municipalities with one or more current mixed-use zones if the department determines that the municipality’s mixed-use regulations unreasonably constrain the feasible redevelopment of an eligible property.1      (2)   1The Department of Community Affairs shall develop Statewide baseline density and bulk standards that shall apply to municipalities without a current mixed-use zone.1  If the municipality’s zoning ordinance does not include a mixed-use zone, a mixed-use development that meets the requirements of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) shall be subject to the following requirements:

 If the municipality has multiple mixed-use zones in its zoning ordinance, the municipality shall designate which of its mixed-use zones’ regulations shall apply to mixed-use developments that meet the requirements of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).  1This subsection shall only apply to mixed-use zoning ordinances adopted prior to the enactment of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).

 The Department of Community Affairs shall develop Statewide baseline density and bulk standards that shall apply to municipalities with one or more current mixed-use zones if the department determines that the municipality’s mixed-use regulations unreasonably constrain the feasible redevelopment of an eligible property.1      (2)  1The Department of Community Affairs shall develop Statewide baseline density and bulk standards that shall apply to municipalities without a current mixed-use zone.1  If the municipality’s zoning ordinance does not include a mixed-use zone, a mixed-use development that meets the requirements of P.L.    , c.    (C.        ) (pending before the Legislature as this bill) shall be subject to the following requirements:

     (b)  (b)  the setback limitations applicable to the mixed-used development shall be the lesser of the setbacks of the existing buildings on the eligible property and the least restrictive setback limitations allowed by the municipal zoning ordinance within the zoning district in which the eligible property is located;

             1(3)      1(3) The municipal planning3[planning] land use3 board 3or the appropriate municipal land use approval authority3 shall not approve an application to repurpose or redevelop an eligible property into a mixed-use development pursuant to this subsection if the project would cause a residential development to be located:

s.96053[s.9605] s.9601 et seq.,3 or a brownfield site designated by the Department of Environmental Protection;

or      (b)  (b)  on a site where there is a clear and direct incompatibility with adjacent high-impact uses, consistent with Department of Environmental Protection regulations, unless appropriate mitigation measures are demonstrated as part of the application for development.1      3(4) A municipal land use board or the appropriate municipal land use approval authority shall approve an application to repurpose or redevelop an eligible property designated under a municipal historic preservation ordinance or listed on the New Jersey or National Register of Historic Places only after review by the appropriate historical preservation commission established pursuant to section 21 of P.L.1985, c.516 (C.40:55D-107).3      f.     Nothing herein shall limit or prohibit an applicant seeking to repurpose or redevelop an eligible property into a mixed-use development from requesting or receiving variances pursuant to section 57 of P.L.1975, c.291 (C.40:55D-70).

     2g.   If a municipal planning3[planning] land use3 board 3or the appropriate municipal land use approval authority3 enforcing municipal zoning regulations permits a conversion or partial conversion of an eligible property into a mixed-use development, such projects involving commercial and non-residential structuresstructures shall shall be subjectsubject to to "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.).

     h.    (1)       (1)  In the case of any conversion permitted pursuant to P.L.    , c.    (C.        ) (pending before the Legislature as this bill), an engineering survey shall be required, which shall include mechanical, electrical and engineering reports, including a structural report consistent with the requirements of section 3 of P.L.2023, c.214 (C.52:27D-132.4) to disclose the condition of the building.       (2)  (2)  An engineering study required pursuant to this subsection shall be conducted, and the results thereof certified, by a person licensed in this State as a professional engineer. engineer.      (3)   The professional engineer who prepares the survey shall certify to the Division of Housing and Community Resources in the Department of Community Affairs whether, in the engineer’s judgment, the building is in compliance with the code standards adopted under the "Hotel and Multiple Dwelling Law," P.L.1967, c.76 (C.55:13A-1 et seq.) and the "Uniform Fire Safety Act," P.L.1983, c.383 (C.52:27D-192 et seq.) and shall list all outstanding violations then existing in accordance with the engineer’s observation and judgment, as well as defects in the structure requiring maintenance, repair, or replacement, which may not be disclaimed by the developer.  The engineer shall be immune from tort liability except with regard to gross or willful negligence.       (4)   With respect to a planned real estate development that includes a conversion, a copy of the engineering survey required pursuant to this subsection shall be disclosed within the public offering statement provided pursuant to section 8 of P.L.1977, c.419 (C.45:22A-28).       (i)      A developer shall provide a fair and reasonable warranty, in conformance with standards promulgated by the Department of Community Affairs, for newly constructed improvements and for any pre-existing building systems, components, or structural elements materially altered, rehabilitated, repaired, replaced, or reconstructed by the developer as part of a conversion project;

provided,     however,(3)  that3[The suchprofessional warrantyengineer shallwho notprepares extendthe tosurvey buildingshall systems,certify components,to orthe structuralDivision elementsof thatHousing wereand notCommunity materiallyResources modifiedin asthe partDepartment of theCommunity conversionAffairs project.2whether,     in 3.   the Aengineer’s projectjudgment, undertakenthe pursuantbuilding tois sectionin 2compliance ofwith P.L.    , c.    (C.        )the (pendingcode beforestandards theadopted Legislatureunder asthe this"Hotel bill)and shallMultiple beDwelling eligibleLaw," forP.L.1967, longc.76 term(C.55:13A-1 taxet exemptionseq.) pursuantand to the "Long"Uniform TermFire TaxSafety ExemptionAct," Law,"P.L.1983, P.L.1991c.383 (C.40A:20-1(C.52:27D-192 et seq.) and shall belist deemedall anoutstanding "areaviolations then existing in needaccordance ofwith redevelopment"the orengineer’s anobservation "areaand judgment, as well as defects in needthe ofstructure rehabilitation"requiring withoutmaintenance, considerationrepair, ofor thereplacement, requirementswhich ofmay not be disclaimed by the "Localdeveloper.  RedevelopmentThe andengineer Housingshall Law,"be P.L.1991,immune c.431from (C.40A:12A-1tort etliability seq.).except with regard to gross or willful negligence.

       4.   (4)]3  TheWith provisionsrespect ofto P.L.   a ,planned c.   real (C.       estate )development (pendingthat beforeincludes a conversion, a copy of the Legislatureengineering assurvey required pursuant to this bill)subsection shall notbe prohibitdisclosed orwithin limitthe anpublic applicant’soffering abilitystatement provided pursuant to applysection and8 qualifyof forP.L.1977, taxc.419 incentives,(C.45:22A-28).  financing,     or(i)   grantsA developer shall provide a fair and reasonable warranty, in orderconformance towith supplement3regulatory3 investmentsstandards forpromulgated projectsby undertakenthe pursuantDepartment of Community Affairs, 3and in addition to P.L.   the ,provisions c.   of (C.       "The )New (pendingHome beforeWarranty theand LegislatureBuilders' asRegistration thisAct," bill). P.L.1977, Notwithstandingc.467 this(C.46:3B-1),3 provision,for projectnewly eligibilityconstructed improvements and for taxany incentives,pre-existing financing,building orsystems, grants,components, or anystructural otherelements award,materially shallaltered, berehabilitated, determinedrepaired, replaced, or reconstructed by the respectivedeveloper awardingas entity.part of a conversion project;

 provided,     however, 5.   that Asuch developmentwarranty projectshall andnot anyextend municipal action undertaken pursuant to P.L.   building ,systems, c.   components, (C.       or )structural (pendingelements before the Legislature as this bill) shall be in compliance with the "Municipal Land Use Law," P.L.1975, c.291 (C.40:55D-1 et seq.) and all other applicable municipal zoning ordinance requirements that dowere not conflictmaterially withmodified theas requirementspart of P.L.    , c.    (C.        ) (pending before the Legislatureconversion asproject.2 this  bill).     3[3.

 A      project 16.  undertaken Thepursuant Commissionerto section 2 of CommunityP.L.    , c.    (C.        ) Affairs(pending before the Legislature as this bill) shall adoptbe ruleseligible andfor regulationslong interm accordancetax withexemption pursuant to the "Administrative"Long ProcedureTerm Act,"Tax P.L.1968,Exemption c.410Law," (C.52:14B-1P.L.1991 (C.40A:20-1 et seq.),seq.) necessaryand toshall effectuatebe deemed an "area in need of redevelopment" or an "area in need of rehabilitation" without consideration of the provisionsrequirements of subsectionthe e."Local Redevelopment and Housing Law," P.L.1991, c.431 (C.40A:12A-1 et seq.).]3        33.   Section of P.L.1991, c.431 (C.40A:20-3) is amended to read as follows:

of section 2 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill).1        1[6.]3.    7.1    As Thisused actin shallP.L.1991, takec.431 effect(C.40A:20-1 immediately.et seq.):

     a.    "Gross revenue" means annual gross revenue or gross shelter rent or annual gross rents, as appropriate, and other income, for each urban renewal entity designated pursuant to P.L.1991, c.431 (C.40A:20-1 et seq.).  The financial agreement shall establish the method of computing gross revenue for the entity, and the method of determining insurance, operating and maintenance expenses paid by a tenant which are ordinarily paid by a landlord, which shall be included in the gross revenue;

provided, however, that any federal funds received, whether directly or in the form of rental subsidies paid to tenants, by a nonprofit corporation that is the sponsor of a qualified subsidized housing project, shall not be included in the gross revenue of the project for purposes of computing the annual services charge for municipal services supplied to the project;

and provided further that any gain realized by the urban renewal entity on the sale of any unit in fee simple, whether or not taxable under federal or State law, shall not be included in computing gross revenue.

     b.    "Limited-dividend entity" means an urban renewal entity incorporated pursuant to Title 14A of the New Jersey Statutes, or established pursuant to Title 42 of the Revised Statutes, for which the profits and the entity are limited as follows.  The allowable net profits of the entity shall be determined by applying the allowable profit rate to each total project unit cost, if the project is undertaken in units, or the total project cost, if the project is not undertaken in units, and all capital costs, determined in accordance with generally accepted accounting principles, of any other entity whose revenue is included in the computation of excess profits, for the period commencing on the date on which the construction of the unit or project is completed, and terminating at the close of the fiscal year of the entity preceding the date on which the computation is made, where:       "Allowable profit rate" means the greater of 12% or the percentage per annum arrived at by adding 1 1/4% to the annual interest percentage rate payable on the entity's initial permanent mortgage financing.  If the initial permanent mortgage is insured or guaranteed by a governmental agency, the mortgage insurance premium or similar charge, if payable on a per annum basis, shall be considered as interest for this purpose.  If there is no permanent mortgage financing the allowable profit rate shall be the greater of 12% or the percentage per annum arrived at by adding 1 1/4% per annum to the interest rate per annum which the municipality determines to be the prevailing rate on mortgage financing on comparable improvements in the county.       c.    "Net profit" means the gross revenues of the urban renewal entity less all operating and non-operating expenses of the entity, all determined in accordance with generally accepted accounting principles, but:       (1)  there shall be included in expenses:

(a) all annual service charges paid pursuant to section 12 of P.L.1991, c.431 (C.40A:20-12);