"It is not going to be 'business as usual' in Trenton," said Michael G. McGuinness, CEO of NAIOP NJ, leading off the update portion of the program. "Incoming Gov. Chris Christie has made it very clear that his administration will be cutting expenses and not looking on the revenue side to balance the budget."
And that's going to be quite the balancing act. On Thursday, Gov. Christie declared a state of fiscal emergency, which came as little surprise since the state is grappling with a $2.2 billion budget gap. This figure could balloon to $11 billion in 2011, according to the Governor's speech, and he cautioned that there could be even deeper cuts next year, calling the state "on the edge of bankruptcy."
For its part, NAIOP has been meeting with the various transition teams, "and based on a survey of our members, we have identified to them the key legislative and regulatory priorities that need to be addressed," McGuinness said. Among those issues: COAH reform, the Water Quality Management Planning and Freshwater Wetlands rules, transportation infrastructure funding, reform of the Economic Stimulus Act of 2009, the state's Energy Master Plan and reform of the Highlands rules.
"For New Jersey, this has been the perfect storm," said Anthony Pizzutillo, NAIOP NJ's public affairs consultant. "We have experienced the combination of a depressed economy and less-than-desirable leadership in competing with other states, especially Pennsylvania and New York. Putting forth initiatives to attract businesses is a key part of our platform. We are pushing for an aggressive economic development agenda."
The fast-paced roundtables focused on the key topics of acquiring distressed real estate, risk management, renewable energy and the new Licensed Site Remediation Professionals program. Attendees spent a half hour at each subject table, exchanging views with roundtable leaders.
At the "Acquiring Distressed Real Estate" table, attorney John S. Stewart of Cole, Schotz, Meisel, Forman & Leonard focused on what is being acquired--a defaulted loan or real estate. He stressed the importance of market risk assessment and complete due diligence, and understanding value changes based on market conditions, zoning and use. "People coming in to buy may think they are getting a great bargain, but they may not be getting what they're paying for," said Iryna Lomaga Carey, also of Cole Schotz.
On to risk management, where Michael Banahan of the Amerisc Corp. asked, "if you have a construction project, how do you insure it for the many coverages required--workers' compensation, environmental, liability and so forth?" The answer for projects of $100 million or more--total costs for the duration of a project over many years--could be wrap-ups; blanket coverage for all contingencies. In any event, "you can have a significant impact on your bottom line by carefully managing risk," added attorney Jon Kelty.
For renewable energy, Andrew Sheaffer and Umesh Goswami reported on state energy programs for New Jersey buildings. Of particular interest was the Pay for Performance program, which provides rebates tied to a reduction in energy usage of 15% or more. "It is one of the best programs in the nation for reducing energy," Sheaffer said.
On the LSRP program, attorney Rob Crespi of Wolff & Samson termed it "new and exciting--it changed the entire landscape of site remediation. But there are a lot of absolute requirements that we are still trying to get our arms around." Noting that it was patterned after a 17-year-old program in Massachusetts, "this is a huge culture shift for the New Jersey DEP," said Jorge Berkowitz of Langan Engineering and Environmental Services. "The New Jersey program is the Massachusetts program on steroids," he concluded.
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