Thousands of homes are being built on or planned for key watershed lands in the northern Highlands, the focus of a hotly debated preservation effort being pitched by the state.

An evaluation by The Star-Ledger of projects planned or ongoing reveals precisely what is at stake - for builders, environmentalists and others - in a legislative battle that has begun to heat up in recent weeks.

Gov. James E. McGreevey and supporters in the Legislature have proposed a comprehensive environmental protection bill that would virtually eliminate major development in half the Highlands region, which cuts across seven northwestern counties and includes the water supply for half the state.

Some 5,500 housing units in 16 major developments are under construction or on the drawing board in that core preservation zone, a vast spread of forest and grassland that buffers key streams and reservoirs. Roughly 395,000 acres are in the core, about half of which are already preserved and one-fifth of which are developed.

The projects are located on some of the 145,000 acres of privately owned land. Many dozens of smaller subdivisions may also be in the works, but no one has tabulated those numbers.

Outside the core but still in the Highlands - where a proposed regional council could only recommend changes - an even greater number of housing units, roughly 24,500, are under construction or being considered by planning boards.

The Highlands, with its large supply of undeveloped land, quiet streams and scenic vistas, has become a favorite of the building industry in recent years. A 2002 report by the U.S. Forest Service showed land was being developed more rapidly there than elsewhere in the state.

The study, which focused on the New Jersey and New York Highlands, reported that 5,000 acres a year were being lost to development in the region.

McGreevey, environmentalists and officials who control the reservoir systems argue that increasing development is threatening the quality of the water supply and introducing a steady stream of low-level pollutants, from lawn fertilizer to pet waste to motor oil.

"The amount of development going on is painfully evident," said Tom Gilbert, executive director of the nonprofit Highlands Coalition. "All you have to do is travel the transportation corridors in the Highlands, see what's springing up along the highways to understand what's going on."

McGreevey and others have referred to it as the death by a thousand cuts.

But builders argue the state, using dubious science and scare tactics, is trying to choke off development, which could undermine the economy.

"Obviously, natural resources are important. But there needs to be a balance," said Howard Wolfe, whose Community Builders Association of New Jersey represents 500 builders, including many who work in the region. "You can't just say, 'People can't build here,' and throw a blanket over the entire area."

The Highlands Water Protection and Planning Act (S1/A2635) would create a regional council with veto power over major development in the region. While single-family homes would be allowed, even the smallest subdivision would come under scrutiny.

New environmental regulations included in the bill could give the Department of Environmental Protection power to halt development on steep slopes, within 300 feet of streams, on forested land and any other number of cases. The plan also will stress land purchases as a means of preserving the land.

The Assembly and Senate environment committees have scheduled a vote for May 10, and McGreevey has vowed that the bill will pass by July 1. It would have an immediate impact on development.

Fierce, behind-the-scenes negotiations are ongoing, however, on the issue of "grandfathering." The bill currently would exempt only those projects that have won all approvals.

Builders complain that environmental standards are already so tough that it can take years to win approvals. Some are lobbying for a more flexible standard, which would allow projects with some level of approval to move forward.

Assemblyman John McKeon (D-Essex), a prime sponsor of the bill, said a grandfathering amendment is being crafted to deal with pending projects.

"That's a tough issue, one that is going to take a bit of work to get done," McKeon said.

The map of the core preservation areas also could change - much to the chagrin of builders, who accuse the state of using sloppy science to draw the line.

The administration has had ongoing discussions with mayors, some of whom argue that mistakes were made.

The current map of the preservation area, released April 16, showed more than two dozen major development projects sitting at the edge of the preservation area. Some could move inside the core in coming weeks, if lines are redrawn.

"Until the bill is finally passed, there can be adjustments to what is in the core, and I expect that's just what will happen," said Jeff Tittel, executive director of the New Jersey branch of the Sierra Club.

In some cases, developments that were inside the core in the state's preliminary map, such as the Villages, a 177-unit complex in Roxbury, are now on the outside, just over the line. There also are several that are so close to the core border - such as the 820-unit Village Grande in Hopatcong - that officials are not sure of the projects' status.

In other cases, such as in Bloomingdale, officials said the state put the wrong areas in the core and left the right ones out.

Mayor Craig Ollenschleger was livid to learn Spring Brook Acres, the site of a former horse farm and an integral part of his small Passaic County borough's economic future, was placed in the core. Meanwhile, three parcels targeted for preservation by the town were outside the line.

"How absurd is that?" Ollenschleger said. "The state got it backwards. They went against our planning. We are going to do everything we can to ensure the property we need to make our plan remains open to development."

Rockaway Township Mayor Louis Sceusi also is puzzled by the state's decision to leave out of the core Pond View Estates, a long-planned 1,050-unit complex at Routes 80 and 15.

"It's 1,000 homes, a major urban-type development. I thought that was the type of thing they were trying to prevent," said Sceusi, who was pleased, however, that the state kept the portion of his town near the Rockaway Townsquare mall as a growth area.

Regardless of what happens with the bill, large-scale development has already come to the Highlands.

Massive new developments, with scenic names such as Indian Fields, Warren Heights and Waters Edge, jut from the landscape throughout Highlands counties - Hunterdon, Morris, Passaic, Sussex, Warren and a few towns in Bergen and Somerset.

While such changes have fueled strong anti-growth sentiment, many divisive issues remain. Critics say the bill usurps home rule and stomps on property rights.

"This has nothing to do with water. This is nothing more than a land grab by the state," said Assembly Minority Leader Alex DeCroce (R- Morris), whose home and real estate business are in Parsippany, a noncore Highlands town whose mayor supports McGreevey's plan.

The preservation effort in recent weeks has pitted builders against environmentalists; worried farmers with life savings invested in their land; given hope to residents who lament losing more woodlands to bulldozers; and created strange political bedfellows in Republican North Jersey, where some legislators, freeholders and mayors have found themselves on opposite sides of the issue.

While battle lines are drawn and strategies considered, building goes on and plans for major new subdivisions are being considered.

The Villages at Musconetcong would add nearly 1,000 residential units and retail space off Route 78 in Bethlehem and Bloomsbury. It is entirely in the Highlands core, however, which could spell its doom.

"Very likely, this legislation would work against the development," said Bloomsbury Mayor Mark Peck, who noted the Villages project, if approved, would more than double the population of his borough of less than 1,000 people. "But the jury is still out on the legislation and the final form it will take."

Two other huge developments already making dramatic changes in Sussex and Morris county towns escaped core designation, pleasing local officials. Crystal Springs is a half-completed golf course development with 1,530 housing units in Hardyston, and Cedar Crest is a retirement community in Pequannock.

"It seems like we'll be okay," said Pequannock Township Manager Kevin Boyle, adding that Cedar Crest has been in the works since 1996 and would be a financial benefit to the town. "But I've been in this business for 20 years. The winds of politics can change pretty quickly. We'll breathe easier when the legislation is passed and the map finalized.

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Lawrence Ragonese works in the Morris County bureau.

He can be reached at lragonese@starledger.com or (973) 539-7910.

Copyright 2004 The Star-Ledger.

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North Byram Concerned Citizens (NBCC) http://www.NorthByram.org