By Joshua Burd
A bill that would allow building owners to obtain faster code inspections using third-party, private-sector agents has moved through the Legislature in recent weeks, raising the hopes of developers and other industry stakeholders who support the proposal.
Under the legislation, builders and landlords would be able to retain a third-party expert if the local code enforcing agency is unable to complete an inspection within three business days of the property owner’s request. The applicant would pay a premium for an expedited inspection using the private-sector agency, which would be licensed and authorized to perform inspections by the state Department of Community Affairs.
Commercial real estate industry leaders say the bill would be a key step toward streamlining construction projects and promoting economic development.
“The frank reality is that the system for code inspections in New Jersey has been stretched beyond its capacity for far too long,” Corey Wescoe of PulteGroup, the New Jersey Builders Association’s immediate past president, told members of a state Senate committee during a virtual hearing on Dec. 8. “There just aren’t enough code officials working in our towns today to come anywhere close to meeting the state’s statutory deadlines. The folks doing this work are doing it as hard as they can but they’re stretched too thin across multiple jurisdictions.”
Wescoe, Pulte’s vice president of acquisitions, said the issue is compounded by “the reality that these professionals are and have been aging in place for a long time, are regularly retiring and there is no bench strength being developed behind them.”
“This leads to a lot of problems and it’s really about more than dollars,” he said. “It costs us the predictability of our schedules, but I think, more importantly, it costs us credibility with our customers, who ultimately are New Jersey residents. And it’s this inefficiency that causes it to be more expensive and more stressful than it needs to be.”
The bill, A4850, received unanimous approval by the Assembly on March 1. An identical version listed as S3905 is now awaiting a second reading in the state Senate, following a 5-0 vote in early December by the chamber’s Community and Urban Affairs Committee.
According to the legislation, a municipal governing body may participate in the program by requiring its enforcing agency to conduct expedited inspections or by allowing an applicant to have a private agency to perform them. Still, local code inspectors retain jurisdiction over the project as well as the final say with respect to issuing a certificate of occupancy.
Michael McGuinness, CEO of the commercial real estate association NAIOP New Jersey, noted last week that third-party inspections were critical in keeping projects moving at the height of the COVID-19 crisis last year. He also said it was “really comparable” to the Licensed Site Remediation Professional program created in 2009, which has allowed third-party consultants to spearhead environmental cleanups and has been “wildly successful and effective” in easing the state’s massive caseload of polluted sites.
The exact fate of the inspection bill is still unclear. Joe Kelley, Gov. Phil Murphy’s deputy chief of staff for economic growth, said the administration agrees with “the spirit of the bill,” but stopped short of expressing support for the current version. He added that “I think everybody realized during COVID that there were some key learnings that we should adapt” and that, even before the pandemic, Murphy’s team was focused on streamlining some of the state’s more archaic permitting and regulatory processes.
Those discussions have been ongoing with permitting agencies such as the DCA, he said.
“The good news is, putting the bill aside, that stuff is happening,” Kelley said Friday during NAIOP New Jersey’s annual public policy symposium, which was held virtually. As for the legislation, he said, “the question becomes, like everything, how do we this in an equitable way?”
Essentially, he said that any effort to reform permitting and code inspections have to provide equal benefits to everything from large-scale, impactful developments to “some of the other smaller projects, which might be equally important but maybe don’t have the headcount or the jobs attached to them, whether it be an infrastructure improvement or doing a curb cut for a dry cleaners in a small municipality.”
McGuinness said time was of the essence in this case.
“With the amount of state inspectors that work for municipal government or state agencies, a lot of them are older, they’re retiring, so I just think we’re going to run into it sooner or later if we’re not already there,” he said. “And we can’t let that happen without having a backup plan. This makes perfect sense to me. It’s just the reality of today’s demographics.”
The Dec. 8 Senate committee hearing drew testimony and expressions of support from a host of other business and labor groups, including the New Jersey Apartment Association, the New Jersey State Chamber of Commerce and the Engineers Labor-Employer Cooperative. Yet the committee heard opposition from the New Jersey State League of Municipalities, which voiced concerns that the bill would cause “a complete shift in inspections” from local governments to third parties.
“This is something that deserves a lot more consideration than what’s going on with just this bill here,” said Frank Marshall, assistant general counsel with the League of Municipalities. He also argued the measure would force local building departments to “act as a transaction agent” for collecting and disbursing fees to private inspectors, adding an administrative cost that they could not recoup.
Additionally, Marshall said the law would hinder the flexibility of the state’s Uniform Construction Code, especially when it comes to the three-day window in which a municipality must complete the inspection before referring it to a third-party agent.
“We feel that it’s more appropriately left in the regulatory sense, seeing as how the UCC is itself more of a regulation, and allow those in the administrative agency who drafted these regulations the flexibility if they were ever needed to change this date,” he said.
Still, the bill seems to enjoy broad support from both lawmakers and a long list of business stakeholder groups, which argue that it will be especially helpful in the state’s economic recovery.
“This legislation is particularly important today in a post-COVID economy because we have a number of office buildings that need to be transfigured and refigured into COVID-safe space,” Anthony Pizzutillo, principal of Pizzutillo Public Affairs, who is NAIOP New Jersey’s government affairs consultant, said during the December hearing. “And, as a result of that, inspections are going to be very important.”