David Gibbons, CEO of Elberon Development Group and outgoing president of NAIOP New Jersey, spoke at NAIOP’s I.CON event in June. – Photo by Gary Gellman Images/Courtesy: NAIOP New Jersey
By Joshua Burd
It may not have the buzz of transportation funding or liquor license reform, but there’s no doubting the importance of the so-called performance bond law that took effect in mid-January.
The law, which Gov. Chris Christie signed on his last day in office, limits the performance and maintenance guarantees that a municipality can require from developers in order to cover the cost of improvements at a site. The measure has likely reduced the upfront costs of developing in the state, in what proponents say is a subtle but critical change to New Jersey’s land use law.
For NAIOP New Jersey, it was also a reminder of the importance of having a seat at the table.
“It takes quite a while for something like that to work its way through the process and get done,” said Dave Gibbons, the CEO of Elberon Development Group and the outgoing president of NAIOP New Jersey. “That’s the nature of the legislative process, a lot of which is healthy, but that’s part of what NAIOP does: It follows that process and it’s in dialogue from the beginning when a bill gets introduced or when there’s even talk about a bill getting introduced.
“And legislatures can’t know everything about everything, so a bill often gets refined and improved after input from folks that do know more about these things. NAIOP likes to be in those conversations — and they are — and it usually results in a much better law.”
Gibbons, who is wrapping up his two-year term as chapter president, touted the performance bond reform as one of the highlights in 2018 for NAIOP New Jersey. The group has also made strides with public policy initiatives such as liquor license reform and funding environmental cleanups, he said, while it has grown to nearly 850 members to become the sixth-largest chapter in the country for the commercial real estate development association.
But he believes there is always more work to be done in both the legislative arena and when it comes to networking and recruitment, which are among the organization’s main functions. Those roles become especially important as Gov. Phil Murphy looks to his second year in office and as the real estate cycle continues to mature.
On the advocacy front, Gibbons said preserving the state’s business and development incentives is a top priority for NAIOP New Jersey. The organization supports the idea of improving the tax credit and subsidy programs, which have helped drive leasing and construction activity over the past decade, but believes it would be a mistake to allow them to lapse with next summer’s statutory sunset date.
“There’s no question they had a very big impact on the turnaround of the real estate market and helping fuel a very healthy market,” Gibbons said. “There’s been discussion about revising those and NAIOP understands that maybe they could be made better and refined, but they need to stay in existence in some way, shape or form. So we’re in that conversation and we continue to plan to be in that conversation.”
The association has grown more confident on the issue since last year’s gubernatorial campaign, when Murphy often blasted the state’s incentives as being too generous and skewed toward large corporations. Since being sworn in, however, he has outlined a vision for preserving the programs but honing them in a way that is more targeted and helpful to small businesses.
“I think, as with so many things, when you’ve got strong opinions on two different sides, the answer is often in the middle,” Gibbons said. “And I think there’s progress on both sides.”
NAIOP is equally mindful of the long-running debate in Trenton about changing how municipalities use tax abatements — namely, payments in lieu of taxes agreements — as an incentive to developers. Lawmakers have proposed new provisions for PILOTs, such as requiring towns to share the revenue with their school districts or mandating the use of union labor, but developers say those would likely add to their costs and jeopardize many projects.
Gibbons said the association is “following that closely” to make sure PILOTs and their effectiveness are preserved under the state’s redevelopment law. Similarly, NAIOP is “playing defense” when it comes to the popular Licensed Site Remediation Professionals program, which allows private-sector consultants to oversee environmental cleanups. The program has helped ease the Department Environmental Protection’s backlogged caseload and added speed and certainty to redevelopments, which he said has been critical during the current cycle.
There has been chatter within the industry about tweaking the so-called LSRP program, which has included NAIOP New Jersey, but Gibbons said it should be kept largely intact.
“If we could improve it, wonderful, but it is very important for development or redevelopment anywhere in the state,” he said. “I would be surprised if it made sense to refine that too much.”
As Gibbons notes, NAIOP’s advocacy work is part of a dual mission that also includes helping its members network and build relationships. He believes the chapter has made notable strides on the latter goal, noting that “the calendar is pretty full with good events” — many of them sold out — such as the annual spring gala and the industrial conference known as I.CON.
New Jersey is also the top chapter in the country when it comes to retention, he said, while noting that the organization has grown its Developing Leaders group to more than 150 members.
“The percentage increase has been very big and there’s probably a lot more room to grow that, which is great,” he said. “Ten years ago that was probably more like 30 or 40 people, so that’s been an area of growth and I think there will continue to be growth there.”
That growth has helped Gibbons feel “really energized” as he prepares to hand the reins to Gene Preston, an east region partner with Dermody Properties, who will succeed him as chapter president. And while the strength of the market has been an important factor, he said the association “was very healthy and (has) only gotten healthier.”
To that end, he said there was no understating the role of the chapter’s full-time staff. Led by CEO Michael McGuinness, Gibbons said “the chapter really runs very well” and enables the president and other trustees to make their own contributions to the organization.
“If you’re adding value, it’s around the edges (such as), through relationships, asking someone you know well to chair a committee or to speak at events, because the events are often as good as the speakers,” he said. “The staff really takes things and runs with it. As a president, you try to be energetic, effective and positive and use your own relationships to try to improve the events.”
He sees additional growth in the chapter’s future, thanks in part to the continued health of the commercial real estate market. And believes the organization will continue to play a leading role in public policy — with issues on the horizon such as incentives and liquor license reform — with the help of the talent in the state’s development sector.
“I think NAIOP has earned a good reputation in Trenton and with our legislators, partially because there is a lot of talent in this organization that really can help bills become better laws,” Gibbons said. “So it helps, whether you’re at events or whether you’re in dialogue with elected officials. There’s a lot to learn from each other through this organization.”
