Reduce or eliminate taxes that impede home sales, abolish the 2.5 percent COAH developers fee, and streamline regulations that hamper builders.
These were some of the suggestions realty and labor experts had for lawmakers Thursday so that a sluggish economic recovery could gather steam in New Jersey.
The Assembly Commerce Committee took testimony from a variety of professionals in the real estate and construction fields. According to committee Chairman Albert Coutinho, (D-29), Newark, he wanted to gather input to provide a snapshot of where the state stands and where it needs to go.
“Things appear to be getting better but everything is relative,’’ said George Sowa, executive vice president and a senior managing director with Brandywine Real Estate Investment Trust, and president of the N.J. chapter of the National Association of Industrial and Office Properties.
Both he and Tim Touhey, of the N.J. Builders Association, strongly urged the lawmakers to work to abolish the 2.5 percent developers fee linked to the Council on Affordable Housing.
Jarrod Grasso, CEO of the N.J. Association of Realtors, told the committee that the real estate transfer tax needs to be addressed.
The tax was instituted to help plug a budget gap, Grasso said, but “It’s counter-productive and it’s pushing people out, especially in the commercial area.” In any potential deal, he said, “Everything adds up.”
Grasso also urged lawmakers to address the so-called bulk sales act, a tax on assets sold outside the normal course of business. Designed to affect primarily commercial properties, it has ended up having consequences for every residential home, including Shore rental homes, he said.
Tens of thousands of dollars are tied up, stalling deals at a time when the state needs to be helping deals move forward, not hampering them, he said.
“Sellers cannot afford to tie up that money in escrow while the taxes are being checked. Deals have fallen through,” Grasso said.
But there is some movement, according to Sowa. He said vacancy rates have improved for two straight quarters. Office vacancy rates have improved slightly but are still near their record highs. Sowa cited rates of 22 percent in northern Jersey, 31.8 percent in central Jersey, and 19 percent in southern Jersey, depending on which data source one uses.
Renters have been able to take advantage of historically low rents to lock in deals, he said.
But the sluggish improvement is tenuous and may prove unsustainable because it is tied to jobs growth, or the lack of it. From February 2008 to January 2010 the state hemorrhaged 250,000 jobs, he said, and the state still lags many others in jobs growth.
But there are projects that could have spurred employment in the past and may create jobs in the near future.
Coutinho cited the long-stagnant Schools Development Authority project list that finally may be showing signs of life with SDA recently coming up with a list of ten projects it said should proceed.
“We should be building those schools,” he said. “We need to push hard there. We’ve been reviewing those things long enough.”
The administration had put a stop to the schools construction program citing the costs and inefficiencies in the past.
Representatives of builders and trades people cited other projects that could have helped spur jobs, such as the canceled-Access to the Region’s Core tunnel project that Gov. Christie put a stop to last year, citing the risk of cost overruns primarily falling upon New Jersey’s shoulders.
But they also told committee members they look forward to the Revel project in Atlantic City and the Xanadu relaunch in the Meadowlands as potential sources of major employment.
But those are commercial projects. Residential projects still will feel a pinch, according to witnesses such as Michael Travostino of the Building Contractors Association of New Jersey.
He said going forward, he expects that people will move away from the suburbs and into urban areas, demanding smaller and less-complex dwellings.
“It’s going to be the cult of live where you work, shop where you live,’’ he told the committee.
But any jobs growth can’t come quick enough for the workers, they said.
George Grant of the International Brotherhood of Electrical Workers Local 269 said they have experienced 25 percent unemployment. “Members are losing homes, vehicles,’’ he said.
And A.J. Sabath of the N.J. Building and Construction Trades Council said they have witnessed unemployment rates of 30 to 50 percent. “Our member unions have been forced to reduce levels of insurance coverage,” he said.
He applauded large capital projects of the type the Recovery Act provided.
“Anybody who rides on our roads and bridges knows they are vastly in need of repair,” he said, adding that the state’s Transportation Trust Fund still needs a stable source of funding.
But “The last wheel in this recovery is housing; we have to get it right,” said Touhey of the N.J. Builders Association.
He said the sad fact of 2010 is that roughly “One out of every 38 households is facing foreclosure,’’ in New Jersey. “We need to accelerate the foreclosures. We have to get through the pain. We can’t have an oversupply of product.”