We assembled a panel of industry experts to tackle our recent roundtable question.
Here’s what they had to say.
Carl Goldberg, managing member, Canoe Brook (Roseland)
New Jersey is the most exited state in the nation. This should be a wakeup call, a way for us to ask new questions and take new approaches to this new market. According to PlanSmart NJ, there are five new renters for every three new homeowners. Walkable mixed-use averages twice the price per square foot as traditional apartment options. These projects include social retail such as restaurants, destinations and a downtown feeling.
Both candidates have pointed to Massachusetts as an economic success story that we should emulate. Do they also support housing policies of the Bay State? More importantly, how do we get towns to engage on this issue? How can we be creative? Proper planning and zoning integrity at the municipal level make a variety and choice of housing — including affordable housing and workforce housing — achievable. What are we doing to incentivize this kind of development?
Dave Gibbons, president, Elberon Development Group (Elizabeth)
What is your position on maintaining or modifying the ability for municipalities to provide tax abatements for expensive redevelopment projects?
An existing statute allows municipalities to grant tax abatements — also known as payments in lieu of taxes, or PILOTs — in connection with expensive development or redevelopment projects. Some abatement in property taxes after significant capital investment is often necessary to make a project economically feasible. The substantial cost of redevelopment projects, which often occur in urban areas where land and construction costs are expensive, requires a higher rent to generate a reasonable return. Assessing property taxes commensurate with total project costs drives up total occupancy costs and/or reduces the return to the investor to levels that prohibit redevelopment.
However, there are multiple legislative bills drafted that would eliminate or greatly reduce the economic benefits associated with tax abatements. Note the existing statute already contains provisions mandating that taxes following completion are higher than the taxes generated predevelopment, and also additional provisions that limit the overall return to the owner/investor. So with the current statute and existing framework, municipalities realize more property taxes after completion of a project. If PILOTs become cost-prohibitive or are eliminated, several potential projects may not happen.
Jerry Lombardo, chairman, Hackensack Main Street, Business Alliance
Legislators need to give developers the proper tools if they are to follow the Smart Growth plan to revitalize our downtowns and build housing in and around our transit hubs. New Jersey’s liquor license laws are antiquated and have not kept pace with redevelopment efforts in New Jersey despite the proven and critical link between cultivating vibrant downtowns with sound redevelopment initiatives and the role that the ability to serve liquor plays in this.
Introduced earlier this year, A4734 is a bipartisan, pro-downtown development bill that allows eligible Smart Growth transit villages to issue permits to sell alcoholic beverages based on the number of housing units being created in the redevelopment zone. This proposed legislation will stimulate both existing establishments and, at the same time, attract new bars and restaurants, which would contribute to a more vibrant nightlife, and ultimately attract potential residents.
Hoboken, Morristown and Jersey City have the kind of ambiance and nightlife that is magnetic to prospective residents, spurring economic activity and residential development. We are optimistic, if the legislators give us the means, that we will have the same opportunity to replicate those accomplishments here in Hackensack. If elected, would you sign such a bill into law?
Steven G. Mlenak, member, real estate and redevelopment and land use, Greenbaum, Rowe, Smith & Davis LLP (Woodbridge)
For decades, New Jersey has experienced notable success with redeveloping many of its distressed areas by affording municipalities the ability to provide tax incentives (such as PILOTS) to redevelopers. These incentives encourage redevelopers to accept the substantial risks and additional costs that come with most projects. Without them, most projects would not be economically feasible. Despite this reality, there are two bills that appear destined for the next governor’s desk that would make redevelopment significantly less viable.
A326 (Singleton) requires that municipalities share residential PILOT charges with its school district(s). S1162/A3435 (Sweeney/Singleton) imposes prevailing wage on any project receiving tax incentives. A326 would make it untenable for a municipality to offer the abatement under attractive terms. S1162/A3435 would render many projects economically infeasible as the economic value of the PILOT would be lost by paying prevailing wages.
Should these bills find their way to your desk, will you sign them into law?
