New Jersey has a big opportunity when it comes to infrastructure. “Once in a lifetime” funding from the federal Infrastructure Investment and Jobs Act bill will inject billions into repairs for the state’s roads, bridges, rail lines and more. There are so many initiatives, in fact, that it was too many to share during NJBIZ’s The Future of Construction and Development virtual panel discussion held May 24.
“I was going to compile a list of projects and it was too large to list,” panelist Lisa Lombardo, director, Construction Law & Litigation Team at Gibbons PC, said during the event, pointing viewers to the detailed breakdown available from the state Department of Transportation, instead. “In the Northeast, because our infrastructure is very old, thankfully as a result of the [IAJA] about $12 billion is being invested,” she said. That includes projects to upgrade the historic New Jersey Transit rail station in Perth Amboy, but also to implement investments in necessities like broadband and water.
Overall, there’s a lot going on. So how’s it going? Joined by additional panelists Brad Bohler, principal, Bohler; Zachary Csik, director, Real Estate-Commerical-NJ/PA, Rockefeller Group; Kate Gibbs, deputy director, Engineers Labor-Employer Cooperative (ELEC) and Mitchell Taraschi, co-chair, Construction Group, Connell Foley LLP, speakers dug into just that in a conversation moderated by NJBIZ Editor Jeffrey Kanige.
Along with the unprecedented opportunity the state faces to invest in its infrastructure comes challenges. For one thing, simply getting the work done. Gibbs pointed to that other “i” word of the moment – inflation – which she said is making materials more difficult to come by due to price increases, but also more difficult to apprehend on schedule. “And we’re seeing significant delay on the governmental side of permitting and things like that,” she said. “And you know in New Jersey we love our home rule, but we do have a lot of layers – especially at the state level – and there are new regulations coming.”
Gibbs did not gloss over the importance of the investments as the state and region looks to build back from the pandemic and start a solid foundation for the future. “We need to figure out how to effectively deploy these federal dollars,” she said. “[W]e cannot have economic development without modernizing and maintaining our infrastructure.” For every dollar you invest in infrastructure you get about a $2 to $3 economic benefit generated in local communities, she said. But “we don’t get that if we can’t get the shovels in the ground.”
And according to Taraschi, not all red tape is the same. He said the hold-ups often depend on the project and funding source. In New Jersey, lead pipe mitigation has already seen investments, beginning a few years ago, in places like Newark and Jersey City. However, that financing didn’t come from the IAJA. For projects that depend on making it through the state and federal workflow, the difference can often come down to the political will to get work done. Taraschi pointed to the progress made in the state’s burgeoning offshore wind industry, and the way it is actually moving forward, as an indicator of how things can function—just recently, the New Jersey Economic Development Authority announced it will soon launch the next phase of its tenant selection process for the New Jersey Wind Port coming to Lower Alloways Creek on the Delaware River in South Jersey.
There are other hiccups that can gum up the works for infrastructure projects, like a changing of the political guard. Csik pointed to bottlenecks that develop when state government transitions from one governor to the next, for example. “Maybe a project will be in the pipeline, everything’s moving along swimmingly,” he said, “and then all of a sudden a new administration comes in and puts the kibosh on it, potentially, and we’ve seen that happen time and time again.”
According to Gibbs, making coordinated infrastructure investments in the state can help project timelines – and bottom lines – because many projects are interconnected. As an example, she said 40% of emissions come from the transportation sector. “The best way to address that is to get cars off the roads … but we need the energy to electrify the transportation sector, we need projects like the NJ Transitgrid … to help us improve that system, but there’s significant opposition on it, even though it integrates all different types of new energy systems. So I think that we need to look at the whole board and see how these different infrastructures, you know, impact each other,” she said.
Lombardo agreed. “These projects are not isolated,” she commented, so key players need to come together and work together.
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Csik brought it down to the local level. As a developer, say you need to upgrade infrastructure to reach an industrial facility or area that is seeing activity in that currently buzzing sector of Garden State commercial real estate. “We’re happy to work at the local level,” he said – either with the township or the owner of a sewer treatment plant, for example. “And we’ll pitch in our fair share, we’re not even asking for any state funds, but when we submit to the DEP [New Jersey Department of Environmental Protection] to get these things done, sometimes it gets held up even without any funding involved.”
Regardless of how it gets out – when is a priority. “[T]he sooner this money gets to where it’s supposed to be used for the infrastructure projects, the better it will be for the citizens of New Jersey,” Taraschi said. “For no other reason than the projects will get done quicker and benefit all of us.” Another important reason, though, is cost. If a project languishes, Taraschi cautions that in the future, it’s likely it’ll be more expensive to tackle than it would be today. Additionally, he cautioned: “The other thing that happens is money, it seems to disappear—it gets used for other purposes. Once it sits for too long, what was once earmarked for this project, all of the sudden five years later, ‘where’d the money go?’ ‘Oh, we needed it for this.’”
That’s a more vague timeline to work against or plan for, but Gibbs also cautioned that time is of the essence: on the federal side, a lot of funding must be not only allocated, but under contract withing a certain timeframe to prevent its being clawed back. And the stakes are too high for that, the group cautioned. “This stuff is needed from our perspective,” Bohler said, because they’re important investments for development and future expansion in the state. “To keep that economy growing on that side of things, without those infrastructures in place, we’re going to have a hiccup” on the development side, he added.
According to Lombardo, looking forward can help change the tide from simply reacting whenever something needs to be addressed. She chalked the habit up to perhaps an industry-wide issue, not necessarily just in New Jersey, but it doesn’t change the scenario or the setbacks it can cause, which in turn affect all residents. “And that’s why you sometimes get into the bind … where you’re behind schedule because you’re not taking action until things are at a point where they’re desperately needed to be done right.” It’s responding and reacting rather than monitoring and anticipating, Lombardo said, and it’s kind of a stumbling block for any state efforts, regardless of whether you’re on the public or private side of things. Which again speaks to the importance collaboration can play to get work done.
“If economic development isn’t happening, then we don’t even get to the conversation of whether something is going to be union or non-union, so we really want to just create an environment where projects are moving forward,” Gibbs said. “Because I think a bunch of you said it: If the thing doesn’t get built, nobody gets the benefit, right? And so we do need to figure out how to work together.”