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month? But that hasn’t happened, at least in Jersey City.”
That’s not to say New Jersey’s development pipeline is drying up any time soon.
“One of the interesting things is that developers have learned from past economic hiccups, and most of them are pursuing the approval process and getting their entitlements in place, because they know how long it takes,” said Bill Harrison, a partner and chair of the firm’s environmental law and land use and approvals groups. “They’re marching along (securing state and local permits), so I’m busier than ever.”
As the Genova Burns team noted, the pandemic has changed the entitlement process by allowing residents to participate virtually in local land use hearings. That has only expanded the pool of vocal opposition or support for projects, the firm’s Gerard Pizzillo said, and there’s nothing to suggest that Zoom hearings are going away in the near term.
That has made it more important
to engage the community earlier in a project and even before a formal formal land use application, through open houses and other venues.
“We’ve always counseled our clients — although it’s not a requirement — it’s always good practice to
meet with the communities early on, introduce who you are and
what the project is and have us take the heat in those meetings,
as opposed to having it all aired out at the planning board hearing,” said Pizzillo, counsel with
Genova, whose practice includes redevelopment and land use.
“The project, from our legal standpoint or from an architectural standpoint, may be a slam dunk,” he added. “But when you have 50 people coming out speaking their mind ... and they could do it from their couch, they could do it from their car, it could sway people’s votes now.”
INCENTIVES
Also looming large is the lack of functioning state incentives for large- scale, mixed-use developments, the attorneys said. Among the subsidies created under a law signed by
Gov. Phil Murphy in January 2021 was Aspire, a gap financing tool meant to succeed the Economic Redevelopment and Growth program that lapsed in mid-2019, but state officials have been slow to adopt regulations for the new offering.
That means developers and municipalities have effectively been without a potent gap financing program for several years.
“No one wants to say it was OK, but it was less difficult to deal with or manage because interest rates were
so low, so gaps for projects were much smaller,” Mazawey said. “But now as the interest rates go up, your rents might not be increasing at the same rate. And now that gap is getting bigger and bigger.”
She agreed that projects are locking in approvals, “but those projects are not going to move from entitlement to building permits and beyond” because they will be hard-pressed to find debt and equity financing.
“There’s a lot of activity in Newark,” she added. “The planning board is
very busy. You go on any week and their agendas are full ... but I’m not sure that those projects — the bigger, more aggressive projects — are going to get built without an incentive program that works and will allow developers to actually use the credits that are there.”
LENDING
Lenders and borrowers will face their own challenges. Rich, whose practice includes banking and commercial lending, pointed to pre-pandemic loans that were booked on three-
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