By Michael G. McGuinness
As of this writing, legislation to facilitate the timely review and inspection of construction activities, which have been on the rebound now that the worst of the pandemic is behind us, is awaiting Gov. Phil Murphy’s signature. We need the third-party option because the number of public-sector inspectors has substantially diminished over the last 10 years and will continue to do so. According to the 2014 International Codes Council report for the National Institute of Building Sciences, 30 percent of inspectors throughout the U.S. were planning to retire in five years, with 80 percent retiring in 15 years. The clock is ticking and the time to act is now.
The current labor shortage is seriously disrupting many employment sectors, including doctors, nurses, airline mechanics and warehouse workers, to name a few. With the retirement and exodus of professional and skilled workers comes a great loss in institutional knowledge, which further complicates the delivery of vital services. In response, many employers are stepping up their game to attract new employees, especially younger ones, to these professions. Some are also resorting to automation. Municipalities cannot compete at this level. Given the many lucrative offers being made by private employers, I suspect there are few young people aspiring to become local code officials.
At the beginning of the COVID-19 state of emergency and shutdown in March 2020, our governor had the foresight to designate construction as an essential activity. Even as many towns ceased operations, the New Jersey Department of Community Affairs (DCA) issued notice that construction inspections MUST continue and, where that was not possible, other licensed professionals (such as engineers and architects) were permitted to certify inspections. Because “third-party” inspections were permitted, projects were able to move forward, and thousands of New Jerseyans stayed employed.
The bills on the governor’s desk (A4850/S3095) improve upon and codify this stopgap measure — or pilot project — and create a solution for the ongoing challenges of understaffed, underfunded and overburdened municipalities unable to complete construction code inspections in a timely manner. Kudos to our state legislators in the Senate and Assembly who unanimously voted for Gov. Murphy to enact these critical measures.
Inspection problems will only worsen with post-pandemic pent-up demand activity, the recent infusion of funding from the federal government and private investors, and the likely increase in inspections needed for myriad senior living projects as Baby Boomers downsize. If enacted, this legislation will make New Jersey better prepared to weather the exodus of government workers and the inevitable next disruption, while modernizing the local inspection and approval process, and providing another tool for local government. Bottom line is that we need to expand the universe of qualified inspectors as quickly as possible.
Unlike many in the public sector, third-party inspectors would be drawn from certified and licensed professionals such as engineers and architects, who meet state requirements and are approved by the DCA. Unlike civil servants, these professionals risk the loss of their licenses and livelihoods should they fail to comply with rules or to meet their responsibilities. Their sole focus would be to ensure the safety of construction. Most importantly, DCA still has the final say and oversight of the work conducted by private agencies through the issuance of certificates of occupancy and developing the standards by which third-party inspectors become certified.
The legislation’s “expedited inspection program,” whereby property owners pay a fee for quicker service, was carefully thought out and pilot-tested during the COVID health emergency. The beauty of this provision is that it would likely free up more municipal inspectors to take care of smaller and less time-sensitive projects, thereby levelling the playing field. Speeding up the review process will allow towns to add new ratables from economic development sooner, and taxpayers will gain added services covered by fee revenues.
Commercial real estate developers and owners are often ambassadors for economic development, constantly courting employers and investors to locate and expand in the Garden State. Pennsylvania, California and South Carolina are just a few of the states that already permit third-party inspections, and New Jersey would be more competitive by following suit.
Perhaps the best argument for supporting this legislation is the uncontested success of New Jersey’s Licensed Site Remediation Professionals (LSRP) program administered by the state Department of Environmental Protection. Since its inception in 2009, the LSRP program has accelerated the process of returning more than 14,000 contaminated properties to productive use and generating local revenues.
Much like the LSRP program, the provisions of S3095/A4850 would ensure 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. Should these bills become law, I have no doubt that many more businesses and residents will rethink their plans to invest in New Jersey. This includes the thousands of retiring baby boomers looking for senior or active adult communities, as well as all the ancillary small and medium-sized businesses that are popping up due to the energized life science and logistics sectors.
If Gov. Murphy still believes that New Jersey should be a state of innovation, then it’s time to take out the official pen and sign these bills into law.
Michael McGuiness is CEO of NAIOP New Jersey and has led the commercial real estate development association since 1997. NAIOP represents developers, owners, asset managers and investors of commercial, industrial and mixed-use properties, with 830 members in New Jersey and over 19,000 members throughout North America.