Gov. Phil Murphy speaks during a recent a COVID-19 briefing. — Photo by Edwin Torres/Courtesy: Governor’s Office
By Joshua Burd
A bill that would streamline construction code inspections in New Jersey using third-party, private-sector consultants is all but dead for now, following a conditional veto by Gov. Phil Murphy that shelved the proposal in favor of a two-year study by state officials.
The legislation, A4850, calls for allowing local code enforcement agencies to conduct expedited reviews in exchange for a fee, while creating a network of licensed agents who could step in if a municipality cannot complete an inspection within three business days of a building owner’s request. The state Legislature unanimously approved the bill in early June, but Murphy on Monday returned it to lawmakers with a series of changes, including the removal of the language that would have established the new program.
In doing so, the governor cited concerns that “allowing expedited inspections in exchange for an additional fee could create a two-track system that moves smaller developers and homeowners to the back of the line in favor of those who can pay a premium.” He instead called for the state Department of Community Affairs to conduct a study of the proposal and other ways to expedite code inspections, the findings of which would be due in 24 months.
“While I share with my partners in the Legislature the desire for residential and commercial real estate development to proceed without unnecessary delay, I have substantial reservations about the proposed method for achieving that goal,” Murphy wrote in a conditional veto message to the General Assembly. “As we work to build a stronger and fairer New Jersey, it is paramount that we preserve the components of our construction code that make it one of the strongest in the country and continue to ensure that the system works for everyone.”
Passage of the bill has been a top priority for industry groups, including NAIOP New Jersey and the New Jersey Builders Association, which see it as a key step toward streamlining development and easing the burden on overextended, understaffed and aging code officials. The legislation would also codify what was essentially a pilot program last year, when DCA permitted engineers and other licensed professionals to certify inspections in towns that had shut down during the COVID-19 emergency and were not performing construction inspections.
NAIOP New Jersey CEO Michael McGuinness said he was “deeply disappointed” with Murphy’s decision.
“It is both puzzling and troubling that our Governor and his advisers would blatantly disregard the problems that currently exist with the state’s inspection review process, in part due to the shrinking base of local and state government inspectors, many of whom are retiring,” McGuinness wrote in a statement. “Even though this bill was unanimously passed by the Legislature, was successfully tested as a pilot program during the COVID health emergency shutdown last year and being able to get timely inspections from municipal agencies is more difficult than ever due to limited hours, the Governor has chosen to totally disregard these realities.
“Rather, he chose to kick the can further down the road by authorizing DCA to undertake a two-year study of how to improve efficiencies. Seriously? This issue has persisted for years and delays and project interruptions have cost towns and the state badly needed tax revenues. A4850 is a carefully thought-out option that would have streamlined the inspection process as well as create much needed capacity enhancing job creation and economic growth.”
Homebuilding industry advocates also reiterated the need for a solution.
“While we are disappointed to see the conditional veto particularly after working on this reform for many years, we will continue to work with the state’s policymakers to bring meaningful relief to the homeowners, remodelers, homebuilders and developers who regularly endure delays in the code inspection process,” said Jeff Kolakowski, CEO of the New Jersey Builders Association. “These delays only add unnecessary costs to our state’s housing stock and impedes the homebuilding industry’s ability to deliver diverse and affordable housing options.”
Proponents have said the framework could follow in the footsteps of the highly successful Licensed Site Remediation Professionals program, which has helped lighten the state’s backlog of environmental cleanup cases over the past decade using private-sector consultants. To that end, McGuinness noted recently that A4850 would play a similar role by “(ensuring) accountability and public safety, while relieving government burdens and allowing economic development to proceed more efficiently as we continue to recover from the devastating impacts of the pandemic.”
He reiterated that belief on Monday.
“Also, contrary to the Governor’s conditional veto, the creation of a two-track inspection review system would most certainly speed up the review of smaller projects that would remain under the purview of local government inspectors,” he said. “I don’t see a problem with finding ways to speed up the delivery of a workplace for a new business in New Jersey.”
In his message to lawmakers, Murphy said he was “certain (it) was not the intent of the bill’s sponsors” to marginalize smaller applicants, but argued that “granting private entities broad discretion to conduct construction inspections when local agencies do not meet their deadlines creates an appearance of bias in favor of those who can afford private inspections.” He also cited concerns that DCA and local agencies — which would retain substantial oversight and final decision-making authority over code inspections — are not equipped to manage a network of private-sector agents.
“(The) resources required to license, authorize and oversee private entities would be considerable, drawing attention from DCA’s and local agencies’ core work and making it even more difficult for local agencies to meet their deadlines,” Murphy wrote. “On top of that, private entities would be taking from local agencies not only much-needed operating revenue, but also experienced code officials, at a time when these officials are in high demand.”
Murphy, however, agreed “that it is necessary for all of us in government and in the real estate industry to continue thinking creatively about how to make sure projects proceed quickly,” while hailing the success of the LSRP program under the state Department of Environmental Protection. To that end, he recommended revising A4850 to require DCA to study whether there is a similar role for private entities to play in construction inspections and permitting, including the degree to which efficiencies can be achieved by consolidating local agencies and through shared services.
He also said DCA should consult with the Department of Labor & Workforce Development “on ideas for cultivating the next generation of code officials.”
“In addition, I am recommending amendments to require local agencies to notify DCA immediately upon determining that they will be unable to meet the bill’s requirement to conduct inspections within three business days of an owner’s requested inspection date,” Murphy wrote. “Failure to provide the required notification will subject local agencies to DCA’s existing authority to take remedial action against agencies that do not comply with DCA’s laws or regulations. This amendment will enable DCA to quickly begin working with the local agency to help it operate more efficiently.”