When it comes to public education, public safety and economic development, New Jersey’s cherished tradition of home rule always has led the way.
Is it time for that to change?
The recently introduced LAND Plan, in which NJ Transit aims to develop (or redevelop) around train stations in an effort to raise necessary funds for public transportation as well as spurring economic development in towns across the state, may put that to the test.
So said Ted Zangari, the longtime chair of the Real Estate Group at Sills Cummis & Gross in Newark.
Zangari, who spoke on the subject Tuesday, during the first day of NJBIA’s Energy & Environmental Policy Forum during the Urban Redevelopment Challenges” panel, said it’s time for the state to push the big-picture benefits of projects.
“I’m all for municipalities governing land use in their communities, but it’s frustrating when a transformative project whose potential benefits radiate well beyond the borders of the host town is rejected due to parochial interests,” he said. “In those moments I find myself longing for a county or regional planning model — not in addition to, but in lieu of, local planning.
“This impediment will be laid-bare most starkly as NJ Transit embarks on its recently announced plan to unlock the development potential of the land it owns around and the air rights above its transit stations.”
Zangari not only said the idea is possible – but he also said the action has precedence.
Zangari said California Gov. Gavin Newsome recently defied his state’s local home rule and signed into law “the Abundant & Affordable Homes Near Transit Act.”
“This new law overrides local land use law and instead establishes state-level zoning standards around train stations and major bus stops to allow for midrise multifamily buildings within a half mile of major transit stops,” he said.
BINJE caught up with Zangari, long known as a thought-leader on all matter of real estate development, for more of his thoughts.
BINJE: You talked today about the hurdles confronting urban redevelopment. Give us a few others?
Ted Zangari: To be clear, most of the same hurdles also affect suburban redevelopment – including home-rule issues.
There’s an emerging trend of municipal bodies and land use boards playing to angry audiences during hearings on controversial applications — knowing full well that they will likely be overruled by the courts for acting arbitrarily and capriciously.
The level of civility at public meetings has fallen so low and the patience for sober consideration of an application’s merits is so thin that many volunteer board members and local officeholders are feeling the heat — in their mailboxes, on their voicemail, at their kids’ ballgames and in the supermarket — and they’re melting.
The losers in all this are the taxpayers, who will foot the legal bill to defend such illegal actions and lose out on the revenue of a new tax ratable, and the developer, who will endure extra months, and probably years, of avoidable carrying costs on the property as well as legal fees from fighting-back.
BINJE: What else?
TZ: There’s a costly new mandate popping-up in redevelopment: The “community benefit.” I always thought that redeveloping an eyesore of a vacant piece of land or an obsolete building into a beautiful new tax ratable— with all the construction jobs, permanent jobs, first source hiring, and the like — was the community benefit. But along comes this new, often expensive, demand, ranging from providing public library space and recreation centers to daycare programs and parks.
Don’t get me wrong — these are laudable community initiatives — but they often come at a significant financial cost to projects that are already struggling to make the numbers work in the midst of rising labor and material costs, and stubbornly high interest rates, while developers are also trying to hold the line on rent rates.
BINJE: You mentioned efforts in California. Are there examples from other states that we can emulate in N.J. to accelerate bringing redevelopment projects to the market?
TZ: California is not alone in this effort to grow its housing stock from the top-down. Colorado now requires cities to allow an average of 40 dwelling units per acre within a quarter mile of mass transit. Massachusetts requires its public transit authority to have at least one multifamily district in the state allowing at least 15 dwelling units per acre. And Utah is now requiring an average density of 50 dwelling units per acre in “transit reinvestment zones.”
If New Jersey is going to make housing affordable, and if NJ Transit is going to be successful in its initiative to unlock the development potential of its transit stations, our state lawmakers must change the municipal land use law to permit, maybe even require, the Big D – density – around its mass transit sites.
BINJE: What’s the ‘secret sauce’ to getting to a fully permitted and capitalized project in a reasonable timeframe?
TZ: It’s setting realistic expectations for the community and public officials from the beginning. Here’s how it could work.
When we are handling a project with a lot of moving pieces at several levels of government, we often prepare a color-coded list of needed government actions at the local, county, regional, state and federal levels. Then we break those items into brackets of what must be satisfied before we go to contract; what must be achieved before we go into the market for financing; what must be accomplished before we go to closing, break ground, etc.
Then, with that task list in hand — as well as an upfront presentation illustrating the projected revenue, jobs and other benefits of the proposed project — we sell the project to the community stakeholders from the ground-up. No false promises and only realistic expectations.
And after we get buy-in and firm commitments from the local government, we go to the county, usually with the local government in tow. Then we go, along with municipal and county officials, to the state — sometimes in the governor’s office with commissioners in the room if it’s are super-transformative project.
Finally, we then appoint a project taskmaster who stays on top of all commitments made by us and those made to us by government officials, making sure everyone keeps their word and stays on track.
By approaching a project in this way, there are no surprises, no disappointments, no “second bites at the apple” and no bait-and-switching by the developer or by government.
BINJE: And finally: We have a gubernatorial election next week. How would you advise the next governor to reorganize state government to better manage the systems we currently have?
TZ: I think state government operated best — in terms of economic development, including real estate development — when we had a Commerce Department.
We have a marketing arm to recruit and retain businesses — that’s Choose NJ.
We have a pitchman — that’s usually the Governor or some other high-level official.
We have the public bank when companies need to be wooed with financial incentives and when redevelopers need a subsidy to make their projects pencil-out — that’s the EDA.
And we have an agency to help companies navigate the bureaucracy to do business here — that’s the state Business Action Center.
But what we do not have is an ombudsman to take each development or redevelopment project of any meaningful size and help it get from permitting and approvals, through groundbreaking, all the way to ribbon-cutting.
This role has been filled on an ad hoc basis, with mixed success, by various people in the Governor’s Office, most recently by a deputy chief of staff and in the Christie administration by the Lieutenant Governor herself. But these officials and their staffs have other duties.
A Commerce Department, as we had in the Whitman years, would tie all these roles and responsibilities together much more effectively.
