New Jersey's economy, and the state's real estate sector in particular, are in trouble. A weak housing market, combined with the sub-prime mortgage meltdown, tight capital markets and negative overall employment growth have considerably dampened what just a couple of years ago was a go-go environment. In response to the changing situation, the New Jersey Legislature promulgated the Permit Extension Act of 2008 as a means to protect investments in projects that had previously cleared New Jersey's notoriously labyrinthine and lengthy permitting process, but were at risk of losing entitlement because of construction overruns and finance delays. The main fear was that, when the economy did turn around, no development projects would be in the pipeline because their permits had expired.
The Act, as originally proposed, would have extended the expiration of all permits issued before 2006, to the end of 2012--or even possibly to 2014, depending on when the economy recovers. This would have applied to permits issued by the New Jersey Department of Environmental Protection (NJDEP), such as waterfront development permits, permits issued pursuant to the "Wetlands Act of 1970;" permits issued by the New Jersey Meadowlands Commission pursuant to the "Hackensack Meadowlands Reclamation and Development Act;" and permits issued by the New Jersey Department of Transportation and other State Agencies. Further, the Act proposed to extend all State Planning Commission and Costal Area Facilities Review Act (CAFRA) Centers and Plan Endorsements.
Not unexpectedly, the proposal provoked a flurry of controversy. Environmentalists questioned whether it was fair for projects approved before 2006 to automatically get a pass on the regulations that NJDEP had passed since then. Builders cited the time and expense involved in obtaining permits for much-needed projects. Both sides worked hard to find anecdotal evidence to bolster their arguments--but couldn't because New Jersey doesn't have a centralized permit tracking system. Unfortunately, that fact went unnoticed, and the discussion remained theoretical since there is no way to determine the real impact of extending the permits or not.
Ultimately, and after much heated debate, the Permit Extension Act of 2008 passed with several modifications. Permits issued before 2007 were extended to mid-2010, with a possible extension to the end of 2010. Permits issued in Environmentally Sensitive Areas such as State Planning Areas 4B and 5 will not be extended. Coastal Center designations will not be extended where (1) an application for Plan Endorsement was not submitted to the State Planning Commission as of March 15, 2007, and (2) designations were not in compliance with the Coastal Zone Management rules.
While the scope of the adopted Permit Extension Act is not as far reaching as some would hope, there at least now is recognition that New Jersey's ability to attract economic growth is hampered by an overwhelming multitude of permits requirements and regulations and, further, that there exists no adequate governmental organization responsible for economic growth in the State. The hope is that this will inspire the Governor and Legislature to provide the necessary infrastructure investments, incentives and policy changes that will keep New Jersey's economic engine turning for the future.
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