NEWARK, NJ—As New Jersey prepares to welcome a new Democratic governor in January, more than a dozen commercial real estate industry leaders detailed public policy recommendations for 2018 earlier this month at a special Gubernatorial Transition program hosted by NAIOP NJ. The program identified what the panelists see as top priorities for the incoming Governor Phil Murphy and his administration.
“This extensive public policy agenda, the result of the visionary work of the Smart Growth Economic Development Coalition, is critical to our efforts to bring to and keep jobs and businesses in New Jersey,” saus NAIOP NJ CEO Michael McGuinness. “The coalition is advising lawmakers to refine policies that have helped fuel economic growth and development, and to address areas where longstanding issues remain, despite our continued advocacy.”
The event followed months of collaboration by the more than 50 industry professionals who make up the Smart Growth Economic Development Coalition. Led by Ted Zangari, chair of the real estate department at law firm Sills Cummis & Gross, the group includes NAIOP New Jersey, the International Council of Shopping Centers, the New Jersey Builders Association and the New Jersey Apartment Association, with representatives from organized labor, the retail sector and other stakeholders.
Proposals included preserving and improving the state’s incentive programs, standardizing local land-use procedures, creating sites for industrial projects, particularly in the Port Newark-Elizabeth region, and expanding successful efforts to streamline environmental regulations.
Public Incentives: “Mend it, don’t end it”
“Our message to the incoming administration is to mend, not end incentive programs,” says Zangari, who called Grow New Jersey “the financial equalizer…motivating companies to invest in locations literally off the grid.”
Tom Banker, a consultant with The Banker Group, who chaired the public incentives committee, said the suggestions are intended to “build on Grow NJ’s success and to include growth engines that have been overlooked.” To help small businesses, the committee proposed easing capital investment requirements and reducing fees based on project size.
“We also propose amending long-term tax abatements for multi-phase projects and moving away from a ‘first come, first served’ approach toward annual or semi-annual competitions,” says Jay Biggins, executive managing director with Biggins Lacey Shapiro & Company. “Establishing clear selection criteria to rate applications will ensure selection of the best possible projects.”
The committee encouraged the state to resume funding the residential Economic Redevelopment Growth Grant that supports development of affordable housing, and provide incentives to convert surface parking into structured parking to make land for transit-oriented development.
Create More Uniformity in Local Land Use Process
“In New Jersey, home rule is a given,” says Meryl Gonchar, co-chair of Sills, Cummis & Gross’ land use practice group. “Our recommendations are not about preventing local governments from controlling zoning, they’re about modernizing the process and making practical changes to streamline development, create more certainty and encourage new business growth.”
Gonchar, who chaired the coalition’s land use committee, says the municipal land use law has a “fundamental mission to establish uniformity in processing land use applications in municipalities across the state. This isn’t happening, and it makes New Jersey less competitive for businesses looking to develop here.”
The committee considered areas where identifying and implementing amendments to the MLUL would lead to greater consistency and uniformity, putting New Jersey on a level playing field with neighboring states. Recommended changes include standardizing non-residential site improvement requirements, creating more consistency across the entitlement process and easing the approval process for projects that will help create affordable housing.
“The backdrop of our recommendations is that the volume of development projects is going to increase, and we’ll be seeing more projects coming up for municipal board approvals,” says Debra Tantleff, founding principal of TANTUM Real Estate. “Where there is no legitimate basis or justification for variations, we need to standardize systems and processes to make it easier for commercial projects to move through the pipeline.”
Regulatory/Environmental: Building on Success
Ten years ago, the SGEDC’s legislative agenda proposed the creation of the Licensed Site Remediation Professional program. Irene Kropp, senior consultant with Langan Engineering & Environmental Services, called the program a “paradigm shift” that has helped ease New Jersey’s backlog of contaminated sites by placing environmental remediation in the hands of licensed private-sector consultants, while maintaining the Department of Environmental Protection’s standards. The DEP still has final authority over remediation projects; however, and industry advocates say the review process continues to hold up progress.
“Our committee looked at potential solutions to expand the use of LSRPs to expedite approvals while preserving the DEP’s right to audit projects,” says Kropp.
Other key considerations include how to offer greater liability protections for ‘innocent purchasers’ looking to buy underutilized land.
“We did comparisons with regulations in neighboring states, which give purchasers more flexibility when it comes to their cleanup requirements,” says Steve Senior, a partner with law firm Riker Danzig Scherer Hyland & Peretti. “We want to continue to protect the public and the environment, but it’s in New Jersey’s best interest to make changes that foster redevelopment.”
The committee also encouraged policies related to a range of environmental regulations including direct oversight, remediation funding sources, remedial action permits, use of contaminated fill and applying a uniform set of remediation requirements to all sites, not just those in the LSRP program.
“Making Land” to Meet Industrial Demand
“Across the US, 96 percent of the land is available for development – it’s just not where it needs to be,” says Morris Davis, academic director for real estate studies at Rutgers Business School. “This is particularly true in New Jersey.”
Morris chaired the coalition’s committee that examined the state’s land shortage, and looked at “what we can do to make more land to meet increased demand for warehouse, distribution and logistics space, particularly in the port district.”
Recommendations range from: repurposing government-owned facilities in strategic locations to the state taking a proactive role in acquiring adjacent privately held properties; utilizing incentives to encourage owners to sell; and taking a lead role in the clean-up of environmental contamination to redevelop the sites.
Jeff Milanaik with Bridge Development Partners, says, “New Jersey is blessed with great logistics, but we’re running out of land for industrial development north of Exit 8A – something this coalition predicted eight years ago.”
Citing a project his company completed that brought new business and jobs to Perth Amboy, Milanaik noted what he calls “legacy sites,” or blighted properties, offer opportunity for redevelopment, but not without assistance from the state (in the form of incentives) and from the municipality in the form of PILOTs (payments in lieu of taxes).
Michael Francois, president of Francois Advisory Services, added that these efforts could be overseen by an existing state agency such as the New Jersey Redevelopment Authority, “which has the in-house resources to effectuate projects and move them forward in a timely manner.”
Photo Caption: Seated: Jay Biggins (BLS & Co.), Cecilia Lassiter (Sills Cummis & Gross) and Anthony Marchetta (NJHMFA). Standing: Tom Banker (The Banker Group).