HOW ABOUT SOME REAL ECONOMIC STIMULUS?

In support of the “severely weakened… building industry,” the New Jersey legislature recently passed the Permit Extension Act of 2008 to “prevent the wholesale abandonment of approved projects and activities.” (A2867/S1919) The theory is that expiring development approvals hinder economic development in recessionary times. It seems to assume that all development is a good thing, despite the past decades of sprawl development, soaring property taxes and declining quality of life. Nevertheless, the bill had widespread legislative support; so, smart growth advocates did their best to advance compromise amendments that would maximize the benefits and limit the potential negative impacts of the permit extensions.

The bill passed, but without many of the desired “compromise” amendments of smart growth advocates. Rather than the desired two-year extension period starting in January 2008, the legislation grants extensions starting in January 2007 through July 2010. Advocates also hoped that extensions would occur only in designated“smart growth” areas. However, the bill only excludes extensions in State Plan Planning Areas 4b, 5, CESs, and non-growth areas in the Highlands and Pinelands. The Act still allows extensions in high pressure State Plan Planning Areas 3 or 4. Amendments regarding wastewater, water supply and public health and safety were also absent from the final legislation.

With the compromise language largely absent from the bill, and knowing the prevalent development pattern of this state, I fear that the resultant “economic development” will be in the form of more power centers, strip malls and mcmansions in our suburbs and rural areas. This fringe, service industry based development does not stimulate the economy in any meaningful way. The business market is the real indicator of a healthy economy. According to Jones Lang LaSalle, New Jersey’s overall office vacancy rate reached 22.3% at the end of the first quarter 2008, and the sublease vacancy rate increased 7.6% over last year (Star Ledger, 4/25/08). The predictions of businesses leaving Manhattan, where the vacancy rate is a comparative 7.6%, for New Jersey’s glut of office space have not come to fruition. The lagging economy has much to do with this, which might seem to support the legislature’s intent in passing the Permit Extension Act of 2008. With all this already vacant space; however, does it seem practical to extend approvals for more office space? Moreover, does it seem likely that developers will take advantage of the extension to build office space in an already saturated market?

Meanwhile, the news out of Rutgers is that New Jersey is consistently realizing a net out-migration. Where are they going? The usual suspects of New York, Florida and Pennsylvania top the list, but they are also going south and west to California, North Carolina, Virginia, Georgia, Texas and Maryland. (Rutgers Regional Report 10/07) Many of these destinations have a more palatable tax climate for both residents and business. This is exemplified by the increase in knowledge-based jobs in the southern Atlantic states, and the resultant inmigration to these states.

All of these trends and statistics preceded the current economic downturn. New Jersey has a glut of underutilized and vacant properties in its urban core and inner-ring suburbs, and its higher paying professional jobs (and professional workers) are leaving the state for more desirable locations. Permit extensions do not solve the underlying problem-- businesses and their employees cannot afford to stay here, and it is not the cost of permits that is making it unaffordable. New Jersey should borrow notes from Governor Rendell of Pennsylvania, where they have out-paced New Jersey in business attraction over the past few years (with much of that business coming from New Jersey!). Pennsylvania has a comprehensive stimulus package with real support within government.

New Jersey can have economic development without sacrificing our environmental integrity and rural character. The legislature would have done better to extend permits only in urban areas and centers, and provide more incentives for redevelopment. Moreover, New Jersey would benefit from responsible reinvestment in its urban core, up grading and expanding its mass transit infrastructure and making it harder/less desirable to develop in the rural areas. New Jersey also needs to provide tangible incentives and real government support to do business here. No longer can we rest on our laurels, and assume our proximity to Manhattan makes us desirable. In a global market, distance is no longer a hurdle. We have to adapt to the times, and do it fast, or not even permit extensions will help us through this recession.

The President’s Corner reflects the President’s opinion and not necessarily that of the APA-NJ Executive Committee or APA-NJ membership. The President can be contacted at pres@njapa.org.