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									                   Real Estate
Advisory board: State’s stimulus will help rescue projects
Developers dimiss critics who                        of tax increment financing under the newly              to 25 percent developer’s equity, he said. Mez-       Santola, executive vice president of Parsippany-
call the slate of incentives a                       enacted New Jersey Economic Stimulus Act will           zanine debt — which was regarded as higher risk,      based Woodmont Properties, said, “Municipali-
giveaway to real estate industry                     help to take projects off the shelf by boosting         and therefore earned a higher interest rate —         ties don’t have a full understanding of how this
                                                     investor confidence and providing developers            would fund the remainder, Goldberg said during        program is going to benefit them.” under ERG,
               By EvElyN lEE                         with an additional source of funding.                   an editorial board meeting with NJBIZ last week.      the state cannot fund more than 20 percent of the
ALTHOuGH THE RECESSION and credit crunch                   Among other initiatives, the stimulus act,        But with mezzanine debt now gone, tax incre-          total project cost, and developers are required to
have largely stalled real estate development in      which Gov. Jon S. Corzine signed into law late          ment financing would help to fill that gap.           make a 20 percent equity contribution, he said.
the state, members of the Governor’s Real Estate     last month, establishes an Economic Redevelop-                “This provides another level of financing       “Everybody has skin in the game,” he said.
Advisory Board contend that an alternative form      ment and Growth Grant program that provides             that’s not in the market today that could stimulate         Goldberg, meanwhile, defended limita-
                                                     incentive grants to help developers address             confidence in either the capital markets or with      tions in other aspects of the legislation — such
                                                     financing gaps in projects in qualifying “incen-        our banks, and even with our own members,” said       as the fact that the urban Transit Hub Tax
                                                     tive areas”; the incremental increases in tax           Tim Touhey, chief executive officer of the New        Credit program remains restricted to nine cit-
                  “You have to walk before           revenues from the project would be the funding          Jersey Builders Association, in Hamilton, and a       ies, despite other revisions made to that initia-
                         you run.”                   source of those grants. ERG replaces the previ-         member of the advisory board. “There is perma-        tive. The program is a pilot, he said, and “you
                          Carl Goldberg              ous Revenue Allocation District program, where          nent debt out there today, it’s not completely fro-   have to walk before you run.”
                                                     tax increment financing was based on future             zen … this comes in to provide that capital piece           If the tax credit is successful in bringing
                                                     anticipated taxes, rather than actual taxes.            you need to get to the permanent debt.”               new businesses and adding jobs to those nine
                                                           “One of the consequences of the chang-                  Goldberg dismissed criticism that the leg-      cities — Camden, East Orange, Elizabeth, Hobo-
Christina Mazza




                                                     es in the macroeconomic condition has been              islation provided a giveaway to developers, as        ken, Jersey City, Newark, New Brunswick, Pat-
                                                     the complete disappearance of what used to be           the ERG grant program requires eligible proj-         erson and Trenton — it is likely “the Legislature
                                                     called mezzanine financing,” said Carl Goldberg,        ects be subject to municipal review and receive       will look favorably about expanding the geogra-
                                                             a partner at Roseland Property Co., a real      approval from the local finance committee.            phy to other qualified urban municipalities with
                                                               estate developer based in the Short Hills     Also, the Economic Development Authority              bona-fide mass transportation outlets,” he said.
                                                    
								
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