NAIOP NJ Public Policy Panel - NAIOP NJ CEO Mike McGuinness, Summit Mayor Ellen Dickson, Assemblyman Gordon Johnson, Robbinsville Mayor David Fried, Assemblywoman BettyLou DeCroce, NAIOP NJ President Michael Seeve, and Somerset County Business Partnership President (and former Somerville Mayor) Michael Kerwin.

NAIOP NJ Public Policy Panel – NAIOP NJ CEO Mike McGuinness, Summit Mayor Ellen Dickson, Assemblyman Gordon Johnson, Robbinsville Mayor David Fried, Assemblywoman BettyLou DeCroce, NAIOP NJ President Michael Seeve, and Somerset County Business Partnership President (and former Somerville Mayor) Michael Kerwin.

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Release Date: Monday, March 10, 2014

Media Contact: Evelyn Weiss Francisco (201) 796-7788

Need for Public and Private Sectors to work together in a Changing Economic Environment is Key

NEW BRUNSWICK, N.J., March 10, 2014 – “Public policy has to encourage economic growth and stem the loss of jobs,” said Michael McGuinness, CEO of NAIOP New Jersey, introducing the program for the commercial real estate development association’s Annual Public Policy Symposium. The event at The Heldrich in New Brunswick offered the views of top public sector officials, as well as nationally-known real estate consultant Jeffrey Otteau.

The transportation infrastructure, investment in the workforce, reform of local laws and planning to make the path to needed development smoother are all key items on the ongoing agenda, according to McGuinness. “The governor and legislature have made a great start, but more needs to be done,” he said.

“We have to have an honest discussion on all of the issues,” said event keynoter and Assembly Speaker Vincent Prieto (D-32, Bergen-Hudson). To begin with, “we in the public sector have to partner with industry to prepare people for the workforce,” he said, noting that “we have gotten away from technical education. College might not be for everyone – we have to prepare people for the trades as well.”

Agreeing that the state has been made more business-friendly through such initiatives and incentives as EO13, “we need ratables. We need a balance. We need to work with you,” he told attendees.

Among other points, Prieto expressed support for reinstating the COAH non-residential fee moratorium. He also expressed support for raising the gasoline tax – “the dreaded ‘T’ word” – to provide funds for transportation infrastructure upgrades, and he indicated support for shared local services “to streamline local government. We need open dialogue on all these issues. I want to work with you to make New Jersey a better place,” Prieto concluded.

Putting New Jersey in perspective from a national standpoint, “the sky is brightening for economic growth and real estate demand” on both fronts, said Otteau, president of Otteau Valuation Group and a New Jersey native. Quoting net absorption figures in New Jersey in 2013 of 1.7 million square feet for warehouse/distribution, 2.5 million for office and 2.4 million for retail, “all sectors are moving in the right direction,” he said.

Challenges remain, however, fostered by economic and demographic shifts that “were accelerated but not necessarily caused by the great recession in New Jersey,” Otteau said. Both in New Jersey and nationally, those changes are the result of geo-politics – “economic globalization” – ­as well as of technology, the implementation of which by businesses “is eliminating millions of jobs. And this is only the beginning.”

One sign of the impact of technology: “Nationally, GDP is up 6.5 percent, so the economy has fully recovered, but employment is down 600,000 jobs – the economy doesn’t need as many people,” Otteau said.

For New Jersey in particular, the result has been a slump in home ownership, contrasting an increase in rentals, according to Otteau. The present era “also marks the end of suburban sprawl – the growth is in the cities and inner-ring suburbs with access to mass transit. Businesses are abandoning the suburban corporate campuses for locations with 24/7 lifestyles.

“The future can be incredibly bright for New Jersey, however,” he said, noting the Garden State’s strategic location vis-à-vis New York and Philadelphia, its deep portfolio of private sector employers, its geographic diversity and its collection of “urban places with infrastructure and well-planned business districts surrounded by housing. We need to embrace these changes and the opportunities they present and chart a path forward.”

Panel Discussion with Public Sector Officials

McGuinness and NAIOP New Jersey President Michael Seeve of Mountain Development Corp. moderated an interactive panel discussion with public sector officials. Responding to a question posed by Seeve regarding the importance of getting municipalities to partner with the private sector “to create places where the next generation wants to live, work and play,” Ellen Dickson, Mayor of Summit, N.J. admitted that “it is a vexing job to figure out the COAH affordable housing obligations.” Noting that many communities are largely built out, “we have a hard time finding properties – complicated by the layers of approvals and rules.”

Property taxes, of course, continue to be a nagging issue. “Public officials are driven by property taxes,” said Michael Kerwin, president and CEO of the Somerset County Business Partnership and former mayor of Somerville, N.J. For example, “we need to reduce the dependence on property taxes to fund education.”

And beyond local planning boards and zoning officials, “our mayors have to be part of the process,” said David Fried, mayor of Robbinsville, N.J. “They have to almost be a salesmen. They must have a great process in place to get things done, and the cities and state have to be on the same page.”

“Cities send too much money to the state and county, and we don’t get enough back,” said Kerwin.

One possible solution: Regional contribution agreements (RCAs), which permit a town to send funds to a receiving town in lieu of building affordable housing units. “They are absolutely necessary,” said BettyLou DeCroce (R-26, Morris), a member of the Assembly Commerce and Economic Development Committee. “The school funding formula is crippling.

“I also feel the need for COAH to be changed – the requirements could be damaging to some communities,” said DeCroce. “We need to untie the hands of local officials. The legislature should be there to assist – not demand.”

“We will work on the COAH moratorium now and fix the whole program later,” said Gordon Johnson (D-37, Bergen), chairman of the Assembly Commerce and Economic Development Committee, who also voiced his support for RCAs.

Specifically on the subject of commercial real estate, the current office vacancy rate statewide and the loss of employers, “we have to look at the successes of the urban areas and ask what needs to be done in the suburban areas,” said Kerwin. “State policy has to apply in terms of investment, infrastructure, and the like.”

One solution: “Move more office space into mixed-use developments and town centers,” said Fried. “We also have to reform the valuation of properties.”

“Towns have to make it easier for development,” said Kerwin. “Developers don’t want to be coddled; they just don’t want to be tortured.”

“The process for developers has to be reliable and predictable,” said Fried.

“Communities have to have someone to push the project,” said Dickson. “And there has to be more transparency to the process.”

“Developers want certainty,” added Johnson.

The condition of the transportation infrastructure also remains a statewide issue, and an increase in the gas tax to fund improvements has been an ongoing issue. “There is a need for an increase,” said Johnson. “The Transportation Trust Fund is broke, and the infrastructure is crumbling. We have to get our roads and bridges back to a reasonable condition. It means jobs.”

“I am against increasing the gas tax. It’s lower than in neighboring states,” said DeCroce, noting the competitive advantage. “The federal government should send more money back to New Jersey, especially for transportation,” she said, noting that what New Jersey gets back from Washington as a percentage of tax money it sends to Washington “ranks last of all the states.”

“Our advantage is our infrastructure,” said Kerwin. “Let’s invest in it.”

“Logistics is the only industry that is a slam dunk on the growth curve, and it relies on the transportation infrastructure, i.e., rail and roads, heavily,” McGuinness concluded. “The legislature has to do something about it.”


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