New Jersey has had a problem for 20 years, but no one wants to admit it, says David Houston, president of Colliers Houston and Company, a commercial real estate services company with an office at 116 Village Boulevard. Although New Jersey has managed to create government jobs, he says, “we may end the year with less or no more private sector jobs than in 2000.”
Likening the situation to the tale of the emperor’s new clothes, he puts the issue even more bluntly. According to surveys by the groups like the New Jersey Business and Industry Association, he says, “we are considered one of the poorest states to start a business and to expand a business in.” But no one seems to be listening.
A study issued by the Bloustein School of Planning and Public Policy at Rutgers University found that 70,000 people are leaving New Jersey annually (U.S. 1, September 24), and what bothers Houston is the state government’s response. “The reaction of Trenton was that the numbers are wrong,” says Houston. What worries him are the consequences of decades of denial. “If you don’t admit you’re sick, you can’t get well,” he says.
Houston will present “Prescription for Prosperity,” a plan to stimulate job creation and economic growth, to the New Jersey National Association of Industrial and Office Properties on Thursday, October 2, at 8:15 a.m., at the East Brunswick Hilton. The panel will also include David Gockel of Langan Engineering and Environmental Services; Peter Viscegliaof Federal Business Centers; and Ted Zangari of Sills Cummis & Gross. Cost: $75. The program is open only to members of NJ-NAIOP and employees of member firms.
One response to the state government’s inaction was the creation of the Smart Growth Economic Development Coalition, the supporters of which include developers, the New Jersey Business and Industry Association, chambers of commerce, and PlanSmart NJ, and even union leaders. “They recognize that their jobs are dependent on a healthy economy,” says Houston.
To push the New Jersey economy in the right direction, the coalition is supporting a number of legislative initiatives:
Permit extensions. The permit extension act would extend permits issued after January 1, 2007, until July 1, 2010 (with up to an additional six months phase-in period), that are scheduled to expire because of the inability to obtain financing in the current economic climate. It would also exempt projects stalled for financial reasons from changes in environmental law, public health standards, building codes, or local zoning made after the permit was granted.
The fear is that if businesses are forced to use their limited resources to apply for new permits during the current economic downturn, they will choose instead to leave the state and take jobs with them.
Houston is ticked at the Sierra Club, which opposes the bill. “The Sierra Club said they should have to comply retroactively to any new regulations before they start development,” he says. The Sierra Club’s belief, he continues, is that by not following the regulations, the environment will be destroyed; but Houston disagrees. “We probably have the toughest land regulations in the country,” he says, except maybe California. “Nobody is raping the environment.”
Changes in the Business Employment Incentive Program. BEIP encourages businesses to locate and expand in New Jersey by giving annual cash grants to approved businesses based on the number of new jobs they have created in the state. The proposed legislation would amend the BEIP act to eliminate the $50 million cap placed on the average incentive amount for businesses in designated urban centers. It would also permit the extension of grant agreements, in certain cases, for up to five years.
BEIP, says Houston, “provides an incentive to companies to locate jobs here, and it doesn’t cost taxpayers a nickel. The incentive comes out of additional tax revenues that new jobs create.”
Creating licensed site professionals. New Jersey has a 20,000-case backlog of cleanup programs awaiting approvals, ranging from issues as mundane as removing underground storage tanks to complicated cleanups of large sites awaiting development. The proposed bills would create a category of third-party professionals who will be able to certify that remediation at contaminated sites has been performed in conformance with the state Department of Environmental Protection’s technical requirements. The bill would also direct the DEP to prioritize sites awaiting approvals into one of four tiers, based on complexity.
The new professionals would be qualified to review sites and make sure plans submitted are appropriate, meet environmental standards, and protect human and environmental health; and once the work is completed would be able to issue the equivalent of a no-further-action letter, allowing development to go ahead. Programs like these have been active in Massachusetts and Connecticut for 20 years.
Expanding funds for revenue allocation districts. Municipalities can set up revenue allocation districts, where they can project future sales taxes that will be generated by new development, and then bond those revenues to fund infrastructure — the utilities, roads, and sewers necessary to accommodate new development. The proposed legislation will expand the types of revenue streams that can be bonded for inclusion in these bonds — for example, parking and income taxes. The goal is to encourage municipalities to experiment with revenue allocation districts that up to now have been reluctant to do so.
The proposed legislation would also redistribute the allocation of property taxes from the current recipe of 60 percent to schools, 20 percent to the town, and 20 percent to the county so that the majority would go to the towns, which will decide where money is needed.
Urban enterprise zone reform. This bill applies the sales tax exemption on purchases by businesses located in urban enterprise zones at the point of sale. It repeals a requirement enacted last year that requires a qualifying business to pay the sales tax and then apply for a rebate. “A refund mechanism allows a business to get immediate credit rather than pay the full sales tax and then get reimbursed,” explains Houston.
Houston graduated from Dartmouth College with a bachelor’s in government in 1967 and served as a naval officer during the Vietnam War. He has an MBA, focusing on finance, from Columbia. He joined Colliers Houston, a firm where both his father and grandfather worked, in 1972. He became president in 1978.
Houston is frustrated. “I’ve been on three or four economic development commissions by various governments,” he says. “We wrote great reports and no one has done a thing about any of them.”
A partial solution, he believes, lies in the bills being proposed. “These are sound bills that do not cost the taxpayer money,” he says, “that are designed to make New Jersey a better place to do business.”