Warehouse Retail Bill Would Stall Warehouse Development, Compromise Job Growth and Reduce Tax Revenue

By Gus Milano, President and Chief Operating Officer, ‎Hartz Mountain Industries

The opinions expressed in this section are those of the submitting authors and do not necessarily represent the views of and may not be attributed as opinions of the Meadowlands Chamber or Meadowlands Media.

As the volume of online retail sales continues to skyrocket, so too does the demand for warehouse/distribution space.  This is no secret.  Still, as consumers come to increasingly rely on the ease and convenience of online retail shopping, many New Jersey residents complain about the proliferation of related truck traffic.  As a result, there is presently a NIMBY movement in opposition to warehouse/distribution development in some communities.

It is against this backdrop that the New Jersey Legislature recently introduced a bill that would effectively stall warehouse development in the State. This legislation is misguided and will stifle a strong real estate asset class and industry that provides good jobs as well as important tax revenues. The timing of this legislation is particularly troubling given that, presently, other real estate asset classes are very weak with declining employment and local tax revenues dropping in New Jersey.

The bill, introduced in the Senate as S-3688, would undermine the New Jersey tradition of home rule and require warehouse projects to undergo County and, in some cases, State review. Any project that qualifies as a “large warehouse” (a term that is not yet defined) would have to go before a County planning board (or the State Planning Commission for projects within the large percentage of municipalities that fall on a County border) for a “regional impact hearing” before going through the local land use approval process.

Such projects would no longer be protected by the time limitations within which local land use boards are required to act. In fact, the several additional procedural steps required by this bill are without time limitations, a troubling prospect for those that work in this fast-moving industry.

Before an application for a “large warehouse” could even go to the County (or State Planning Commission), the host municipality would be obligated to first undertake a review of its master plan and must prepare a “regional economic and land use impact report” to analyze the potential effects of the project. This report must consider, among other things, the effect of the project on regional wages and benefits, and the effect on traffic and affordable housing.

Of course, the developer is required to pay for the study, which is likely to itself take several months to prepare. Between the required master plan review and impact report, an application likely will take close to a year before ever reaching the County planning board (or State Planning Commission).

When an application eventually reaches the County planning board, the standards for review set forth in the legislation are irretrievably vague, require applicants to prove negatives and require that the impact of the proposed project be viewed at the regional level.

The only beneficiaries of these standards will be lawyers, as the standards will inevitably spawn a multitude of lawsuits. And, a party that is aggrieved by a decision of a County planning board can then appeal to the State Planning Commission (which is effectively an inactive agency with many vacant and unappointed seats).

It is not difficult to see that an applicant forced to go through this process—through the studies and reports and approvals and appeals—will lose roughly 18 months on a project before ever getting to the local planning board. Prospective tenants simply will not wait around, given the velocity of the market.

In a State that already is among the most difficult in which to develop real estate, with high costs of development and already unwieldy delays to bring product to market, this bill will further handcuff what is truly the State’s strongest industry – costing jobs and tax revenues as distribution facilities go to our neighboring states.

The misguided vision behind the bill is also evident in its over-breadth: the bill would apply to all “large warehouses” regardless of specific use, including wholesale operations, long-term storage and all types of warehousing, despite that fact that uses of this nature don’t create the conditions that the bill is trying to prevent. The bill also discriminates against distribution operations despite the fact that other uses are known to generate higher volumes of traffic, such as office uses and sometimes multi-family.

This legislation completely ignores current consumer trends and the reality of the economy. Over-reactions are typically counter-productive; this legislation is no exception. A different approach is needed.

 

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