More demands on developers?

Leaders weigh local impact of statewide bills

Can New Jersey towns put more demands on developers who get government grants, without thwarting local development and job creation?
That’s the dilemma facing Gov. Jon Corzine as he considers two pieces of legislation currently sitting on his desk – one that is positive for developers, and one that is more negative.
The first bill, known as the economic stimulus package sponsored in the state legislature by Sen. Raymond Lesniak, seeks to jumpstart New Jersey’s economy by creating incentives for developers such as public grants and waiving a number of development fees.
The other bill, known as the EnCap legislation, would force developers who get $25 million or more in public financing to put up more of their own financing and make their records more open to the public.
That second bill is nicknamed after the failed EnCap project that went bankrupt last year. The project was in development in Bergen County, not far from the border with Hudson County. EnCap was an ambitious project to remediate a string of old landfill sites that ran through North Arlington, Lyndhurst, and East Rutherford. It could have included hotels, offices, and a golf course.
EnCap’s parent company, Cherokee Investment Partners, received more than $300 million in public financing for the project, but refused to disclose information about the company. Eventually, the development company went bankrupt and the project failed.
Both bills were approved by the legislature on June 25 before state leaders broke for the summer recess. But Lesniak pressed Corzine not to sign either bill until the EnCap legislation’s impact on his economic stimulus bill is known.

EnCap and Secaucus

Ten years ago, the New Jersey Meadowlands Commission selected EnCap to clean up and redevelop a contaminated site. Early supporters of the project, including Secaucus Mayor Dennis Elwell, thought it would be a model for future public-private development ventures and would be a win-win all the way around. After all, the garbage dumps would be closed permanently. Contaminated land that was saturated with leachate, a toxic stew that ran off into the Hackensack River, would be cleaned. Desolate space would be put to good use. And the entire region, including nearby Secaucus, would benefit from an expanded tax base as new businesses moved into the planned offices spaces that were going to be built.


“New Jersey is seen, in many ways accurately, as unfriendly to business investment.” — Raymond Lesniak

“Secaucus is a community that pays more than $3 million into a revenue-sharing pool every year,” Elwell said, referring to the taxpayer dollars that the township forks over to the New Jersey Meadowlands Commission, which oversees area development. “Our hope for the EnCap project was that it would create new ratables” – tax dollars from commercial properties – “and would eventually offer some economic relief to the people of Secaucus.”
Elwell wasn’t the only official to get behind EnCap. The developer won the support of state agencies and other municipal leaders.
By 2007, however, the project was running over budget and behind schedule. Some environmental groups were unhappy with how the cleanup was being done. Gov. Corzine has directed the Office of the Inspector General to conduct an investigation into what went wrong.
Backers of the EnCap bill say their legislation would protect taxpayers from similar problems in the future.

Secaucus and the stimulus

But supporters of the stimulus bill believe the EnCap legislation could hurt development and public-private partnerships.
“New Jersey is seen, in many ways accurately, as unfriendly to business investment,” Lesniak commented by e-mail last week. “Our job creation has trailed the national economy for most of this decade. The EnCap requirements, as applied to the stimulus bill, serve no public policy purposes and reinforce that anti-business perspective.”
The economic stimulus package is expected to create at least 15,000 to 25,000 short-term jobs in the construction industry, on top of thousands of permanent jobs, according to Hudson County Freeholder Bill O’Dea, who worked on the legislation with Lesniak.
O’Dea also believes the EnCap bill would hurt the “economic growth grants” outlined in the stimulus package.
“Say a hotel or restaurant or supermarket wanted to build in Secaucus,” O’Dea commented. “The growth grants would allow developers to get up to 20 percent of future expected revues up front to use at the front-end of development. This money would come from the state.”
Lesniak is optimistic the two bills can be made compatible without undercutting the intent of each legislation.
E-mail E. Assata Wright at


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