N.J. Admin. Code § 14:1-5.6

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

Section 14:1-5.6 - Petitions for the approval of the sale or lease of property

(a) Petitions for the approval of the sale, conveyance, or lease of real or personal property, or the granting of an easement, or like interest therein as required by law shall conform to the provisions at N.J.A.C. 14:1-4, 5.1, 5.2, 5.3, and 5.4 to the extent applicable, and shall, in the body thereof, or in attached exhibits, also provide the following information:

1. An original and one copy of a separate sheet or sheets designated Schedule "A" containing a description of the property;

i. For real property, the location by municipality and county, a metes and bounds or other adequate description of the property, together with a description of the property and rights, if any, reserved by the utility shall be shown;

ii. For personal property, sufficient information to identify the property adequately shall be included;

2. The name of the transferee or lessee, the consideration or rental and method of payment thereof, and rights reserved by the transferor or lessor;

3. A copy of the written agreement, if any; if there is no written agreement, it shall be so stated;

4. A certified copy of the resolution of the board of directors or other authority authorizing the transfer or lease;

5. The purpose for which the property was originally acquired, the date of acquisition, the use made of the property for utility purposes, the date when and circumstances under which it ceased to be useful for such purposes, the present use, the possible prospective use, and the identity of the official or officials who determined that the property is not now or prospectively required or useful for utility purposes.

i. Any utility requesting to convey land utilized for the protection of a public water supply to a corporation or other entity which is not subject to the jurisdiction of the Board shall submit to the Board a detailed explanation of the prospective use or uses of the land to be conveyed and an assessment of the impact that the conveyance, and the prospective use or uses of the land conveyed, would have on the water quality of the affected public water supply.

ii. Any water utility requesting to convey or lease land shall include a statement as to whether the property is subject to the jurisdiction of the Watershed Property Review Board and if so, describe the status of any pending application before that Board;

6. The basis of the price or rental: assessed valuation, appraisal, comparable sales, or other basis; whether it is the best price or rental attainable; an appraisal, if any, shall be attached as exhibit;

7. Whether the proposed consideration or rental represent the fair market value of the property to be conveyed or leased;

8. What steps were taken to put this property on the market and accomplish its sale or lease; if bids were solicited, the names of bidders and the consideration or rental offered shall be included;

9. Whether there is any relationship between the parties other than that of transferor and transferee, or lessor and lessee;

10. The actual cost at date of acquisition, and the cost and nature of any improvements;

11. The amount at which the property is now carried on the utility's books;

12. Copies of proposed journal entries to record the transaction when the consideration is more than $ 20,000;

13. If property is income producing, details, such as carrying charges, taxes, and assessed valuation, shall be included;

14. If the property is encumbered by any mortgage, describe the mortgage, the amount thereof, and the time required to obtain a release, shall be included; and

15. When the property to be sold or leased has a net book cost or fair market value of more than $ 500,000, the petitioner must attach to the petition copies of the advertisement required by (b) below, and proof of publication.

(b) Where the Board's approval of sale or lease is required by law and the property has a net book cost or fair market value of more than $ 500,000, the property shall be advertised for sale or lease at least twice, one week apart, in a daily newspaper published or circulated in the county in which the property is located, within 150 days immediately prior to the filing of the petition for the approval of the sale or lease, except that advertising shall not be required for sales or leases of property for public utility purposes to another public utility or other person or company subject to any jurisdiction of this Board. The advertisement shall contain the following:

1. A description of the property to be sold or leased and improvements thereon. In the case of land, this shall include the street address, if any, and a description sufficient to identify the location of the property and its approximate size, which may be a description by metes and bounds or lot and block numbers;

2. The place where the property is located or may be inspected, together with the street address, if any;

3. Conditions of the sale or lease, if any, together with a provision that the utility may reject any or all bids;

4. A statement that the sale or lease is subject to the approval of the Board of Public Utilities;

5. A statement of the place and final date for submitting sealed bids which shall not be less than ten days after publication of the second advertisement together with a statement of the time and place of the opening of said bids, which shall not be more than five days following the final date for submitting bids, at a place in New Jersey; and

6. A sealed bid, in accordance with the requirements of (b)5 above, must be submitted by a prospective purchaser or lessee. However, an offer or agreement to purchase or lease in writing received by the utility or executed before the first date of advertising and still in effect at such date, shall be considered as if it were a sealed bid, provided such offer or agreement in writing meets all other conditions of sale or lease, if any, included within the advertising.

(c) In addition to any other transactions not requiring approval or which on their merits may be deemed to be in the ordinary course of business, any lease, grant or permission by a utility to occupy or use its real property or any interest therein which is terminable at the option of the utility upon notice not to exceed 90 days, and any release, by quit claim deed or otherwise by any utility of any lease, easement, or permission to occupy or use real property, shall be deemed to be in the ordinary course of its business. Neither notice to the Board nor petition for its approval shall be required with respect thereto.

(d) In addition to any other transactions that on their merits may be deemed to be in the ordinary course of business, the sale, lease, encumbrance, or other disposition by any utility of such of its property or an interest therein as is set forth in (d)1, 2, and 3 below, may be consummated without petition to the Board for approval, provided, however, that the utility shall have given written notice thereof to the Board, to be received not less than 30 days prior to the effective date of the proposed sale, lease, encumbrance, or other disposition of such property. The transactions that may be completed without petition to the Board are as follows:

1. The sale of personal property having a net book cost and sale price not in excess of $ 100,000 and which is no longer used by or useful to the utility;

2. Except as provided in this section, the lease or permission to use or occupy real property or any interest therein having a net book cost not in excess of $ 500,000 and a net rental not in excess of $ 50,000 per annum; and

3. The sale or release of real property, or any interest therein, not used by or useful to the utility and having a net book cost and sale price not in excess of $ 500,000.

(e) On expiration of the notice period and on payment of the statutory fee, the Secretary will certify on a true copy of the notice to be furnished to the Board that such sale, lease or release is deemed to be in the ordinary course of business and within the statutory provision. Such notice shall contain, to the extent applicable, the following:

1. The name of transferee or lessee, the consideration or rental and method of payment thereof, and rights, if any, reserved by the transferor or lessor;

2. A copy of the agreement or lease and a map of the real property;

3. A statement that the proposed consideration or rental represents the fair market value of the property to be conveyed, or the fair rental value of the property to be leased, giving the basis for the conclusion reached;

4. A statement of any relationship between the parties other than that of transferor and transferee, or lessor and lessee, or a statement that there is no such other relationship, as the case may be;

5. The amount at which the property is carried on the utility's books;

6. A statement as to whether or not the property is income producing and, if so, details as to whether the petitioner pays all carrying charges, including taxes. In addition, such statement shall include the assessed valuation of the property;

7. A statement, in the case of a proposed sale, that the property is not used by or useful to the utility, and in the case of a proposed lease, grant or permission, that the transaction will not compromise the ability of the utility to render service;

8. A verification by a properly authorized officer, partner or proprietor of the statements contained in the notice; and

9. A blank space of three inches shall be provided at the bottom of the first page of the notice for the Secretary's certification.

(f) The Board may, within the aforesaid 30-day notice period, suspend the provisions of this rule and require the filing of a petition for the approval of the sale, lease, encumbrance or other disposition.

(g) Where a property to be sold or leased has a net book or fair market value not exceeding $ 500,000, the petition for the sale or lease of said property, which shall be verified and supported by such proofs as may be required by the Board, shall be acted upon by the Board on the basis of a staff report signed by the Executive Director of the Board or his or her assistant concurred in by a New Jersey licensed attorney employed by the Board, containing:

1. A finding that the approval of the petition will not adversely affect the ability of the utility to properly serve the public or otherwise prejudice the public interest; and

2. A recommendation that the petition be approved without hearing. Where approval without hearing is not recommended, the petition will be placed on the Board's agenda for disposition.

(h) Regardless of the recommendation referred to in (g)2 above, the Board may, in its discretion, require that the petition for the sale or lease of property be placed on the Board's agenda for disposition.

(i) Upon request by a utility, and in accordance with the general purposes and intent of this section, the Board shall grant said utility a waiver to the advertising requirement set forth at (b) above, if:

1. The waiver shall not adversely affect the public interest;

2. The subject property is no longer used or useful for utility purposes;

3. There is no prospective use of the property for utility purposes or no other likely prospective purchaser;

4. The sale of the property shall not affect the ability of the utility to render safe, adequate and proper service;

5. The selling price represents the fair market value of the property to be sold based on a current independent appraisal;

6. There is no relationship between the parties other than that of transferor and transferee, or lessor and lessee; and

7. The request states the reasons of the utility in seeking the waiver which may include, but are not limited, to the following:

i. The subject property is unique and requires an unusual sales contract or represents an unusual transaction;

ii. The advertising and bidding shall not result in a higher sales price;

iii. The advertising and bidding shall be detrimental to the sale of the property;

iv. The unlikelihood of the existence of other bona fide purchasers who could meet the requirements of the proposed sales contract;

v. The development of the property for private use will require extensive environmental permitting due to an existing contamination condition; and

vi. The inability of any other bidder to obtain the necessary permitting authorization to develop the property.

(j) The Board reserves the right to request additional information and documentation in support of a request for a waiver of the advertising requirement as set out in (i) above.

(k) For the purposes of this subchapter, the term "ordinary course of business" shall include, in addition to any other transaction that on its merits may be deemed to be in the ordinary course of business:

1. Any transaction involving the sale or other disposition of a utility's surplus personal property or equipment no longer used or useful to the utility, where there is no prospective use of the property for utility purposes and the sale or other disposition of the property will not affect the utility's ability to continue to provide safe, adequate, and proper service;

2. Any quit claim deed to resolve an ambiguity or dispute, corrective deed, exchange of personal property with comparable market values, or the exchange of contiguous real property where such exchange does not compromise the needs of the utility and the affected properties have comparable market values; or

3. The grant by a utility of easements, licenses, tower leases, and roof-top leases where such transactions do not compromise the needs of the utility and will not affect the utility's ability to provide safe, adequate, and proper service.

N.J. Admin. Code § 14:1-5.6

Amended by 47 N.J.R. 2388(b), effective 9/21/2015

Amended by 55 N.J.R. 393(a), effective 3/6/2023