By Joshua Burd
A long-awaited but contentious solution to the state’s transportation funding crisis is heading to the desk of Gov. Chris Christie, who has agreed to sign the $16 billion infrastructure plan.
The legislation calls for raising the gas tax by 23 cents — the first hike in the tax since 1988 — while bringing the sales tax down from 7 percent to 6.625 percent by 2018 and enacting a series of other tax cuts. All told, the plan would pump $2 billion into the state’s Transportation Trust Fund over the next eight years, paying for sorely needed road, bridge and rail projects.
The compromise caused business leaders to breathe a sigh of relief on Friday after the legislation was passed by both the state Senate and Assembly. Organizations such as NAIOP New Jersey, the commercial real estate development association, have spent years advocating for a solution to the crisis.
It’s why Real Estate NJ spoke to Michael McGuiness, CEO of NAIOP New Jersey, to gauge his reaction and discuss the importance of the breakthrough.
Real Estate NJ: It wasn’t the easiest path to get here, but it looks as if Trenton reached a solution. What’s your immediate reaction to the compromise?
Michael McGuinness: We are very happy. I think that this will be just one of many things that will help to reenergize our economy moving forward — certainly more so next year.
I’m optimistic. I just think that now having a reliable source of funding — or at least a decent amount of funding, for starters — to maintain and upgrade our mass transit, our rail, our roadways is a win-win. It’s what we need to do. How we get there, quite honestly, is secondary. We just have to get it done.
RENJ: Can you put into context just how important this issue was to NAIOP New Jersey, relative to any other public policy issues that you advocate for?
MM: It’s certainly been our No. 1 issue for many years. It has sort of taken a backseat in the last couple of years, only in that there were other crises that popped up in the interim, like dealing with COAH and affordable housing. But all along, we knew in terms of important issues, this really has been No. 1. There are urgent issues, which are not necessarily the most important ones, but transportation has been both important and urgent. So just getting this off our plates is wonderful. It allows us to move on, and knowing that we’ve given it our best shot is something we can be a little bit prouder of. And I don’t mean us as an association as much as I mean the state. We’re marketing the state, you’re trying to drum up business, you’re trying to make the pitch of ‘Locate here,’ so this is a feather in our cap.
Quite honestly, it’s not even icing on the cake. It makes us whole. We are very heavily a corridor state and we need more than most states in terms of dollars, maintenance and upkeep, and there’s more going on here per square mile than there is in any other state.
RENJ: Is there any one particular asset class that benefits most from an improved transportation infrastructure?
MM: It seems as if this one has embraced an element of transportation that does benefit our industry and has not really been included in the past — and that’s – rail. I was very pleased to see that because that’s been one of our Top 10 priorities, or at least close to it.
I was blown away when I was reading the bill and saw there was a provision in there to mandate a minimum amount of funding ($25 million annually, an increase of $17 million from the current appropriation) on freight rail. … For the industrial community — and that’s where a lot of the action is these days —that’s a big thing. And, honestly, that is something that we have been lobbying on for a while. I know Senate President Sweeney took that to heart because we did meet with him on a number of occasions and we brought that to his attention. And he had his people follow up, so I’m very pleased to see that in the bill.
This is the first time I’ve seen something like this that’s been so specific. I would say that it’s good to see that some of your efforts get addressed. But I think the industry — at least, the industrial community and all of these jobs that are happening in the state that are commerce-related — will benefit from this. … We will be better able to compete with even our neighbor in the Lehigh Valley, because they do have freight rail that can handle up to the federal limit, whereas New Jersey does not.
RENJ: Is there anything else about the legislation that could be especially important to the industry?
MM: They’re modeling the oversight, bonding and the financial (aspects) after the New Jersey Environmental Infrastructure Trust. I think it’s an awesome, functioning agency, so … to me, that’s almost like elevating the attention that transportation is going to get. What was the EIT is now going to be the (New Jersey Infrastructure Bank), which will have a transportation component and it will have an environmental component. I think that’s a good thing.
RENJ: Assuming this is signed into law, as is expected, what’s next for NAIOP New Jersey on the policy front?
MM: Now that the transportation funding is in place, we’ll have opportunities to work with the new kids that will soon be coming on the block to implement policies and help towns. We’re doing a lot more with municipalities now and focusing our efforts on educating municipalities and local officials on what they should be doing differently, how maybe they should be advocating differently in Trenton. It addresses a host of things: school funding, zoning, workforce housing, mixed use. The model of having your town zoned industrial in this section, office in this section, residential in this section — that’s sort of old. The more happening towns —— certainly, the more vibrant ones — have a mix of retail, residential, office and transit.
Editor’s note: The above Q&A contains excerpts from an interview conducted by Real Estate NJ.