5/10/2016 Senator calls for Rt. 35 investigation, Russ Zimmer, Asbury Park Press
A state senator is calling for a federal investigation after an Asbury Park Press report revealed that the restoration of Route 35 has become one of the most expensive road projects in New Jersey history.
The rebuilding project's final bill has ballooned to an estimated $341 million, or $27.3 million per mile for the highway that runs from Seaside Heights to Bay Head on Ocean County's northern barrier peninsula, according to an investigation by the Asbury Park Press.
That's about 31 times more than a typical mile of roadway costs in New Jersey, using the state's own calculations.
State Sen. Raymond Lesniak, D-Elizabeth, has asked the U.S. Department of Transportation and Congress to dig into what happened on the 12.5-mile project.
"The Route 35 reconstruction project is the poster child for what’s wrong with the state and federal government’s Sandy relief effort,” Lesniak said in a statement on Monday. “It is over budget, a year behind schedule, and now we learn that New Jersey taxpayers are going to have to foot a $100 million bill. This is a boondoggle that is completely unacceptable.”
The state DOT should know and take action before a project's spending spirals out of control, said Assemblyman John Wisniewski, deputy speaker and chair of the transportation committee. He said the Press' report on Route 35 was the first he'd heard of problems with the project.
"You don’t spend 30 percent more on a project without first knowing that it was 2 percent over and then 5 percent over.," Wisniewski told the Press on Monday. "At those smaller amounts there should be a warning to the DOT that something is wrong."
Much of the overruns can be traced to state and federal officials' desire to move quickly, condensing the timeline for the massive project into two years. However, the plan backfired and not only did the project ring up an extra $76 million in costs but the completion date was pushed back a year.
Another $23 million in non-construction overruns have not been explained by the NJDOT.The project is on pace to be 29 percent over budget, including nearly $25 million paid to contractors to make up for 592 days worth of design- and planning-related delays. One contractor was paid $18.3 million just to wait around for months while miles of natural gas pipes were replaced.
State Sen. Jennifer Beck, R-Monmouth, pointed to the Route 35 story on Twitter and cited it as a reason not to support raising the gas tax.
And it's not just elected officials, readers took to social media to voice their frustration.
The government's willingness to accept extra costs for this project leads to questions about its priorities in the Sandy reconstruction.
Fewer than 7,000 people live on this stretch of Route 35 and many of them are quite affluent. The standard household in Mantoloking, for example, earns more than double the typical family in New Jersey, according to the U.S. Census Bureau.
Still, the Christie Administration and the Federal Highway Administration set out an aggressive timeline for Route 35 and accepted the budget-busting risks that come with fast-tracking a project of this scale. Their hope was to completely restore the critical commercial thoroughfare and evacuation route before the 2015 summer, which didn't happen.
Meanwhile, thousands of low- and middle-income New Jerseyans have had to fight tooth and nail to persuade the federal and state governments to release disaster aid so they could rebuild their home.
Although the flagship home rebuilding program has now completed 3,174 homes as of Monday, construction was slow to begin because of bureaucratic red tape holding back the aid money.
If the government is going to go over budget on Sandy projects, those dollars "should have gone to homeowners who are still struggling to put together sufficient funding to get home more than three years later, not to cover our poor planning and execution," said Amanda Devecka-Rinear, executive director of the New Jersey Organizing Project, which has lobbied for Sandy survivors.
Russ Zimmer: 732-557-5748, email@example.com
5/3/2016 Has New Jersey recovered following Sandy? Maybe. Maddi Hannah, Trenton Bureau, Philadelphia Inquirer
Touting tourism gains and distribution of rebuilding grants, Gov. Christie delivered a clear message last week on the state's progress since Hurricane Sandy.
"We have recovered from Sandy," he told business leaders at a Chamber of Commerce Southern New Jersey luncheon. "We've done it faster than Louisiana or Mississippi recovering from Katrina."
But gauging the state's recovery 3 1/2 years after the October 2012 storm depends on whom you ask - and how recovery is measured.
Christie noted last week that 4,000 families still are out of their homes. But he promoted recovery grants awarded through a state program and growth in tourism revenue, describing last summer as the best "for revenue in New Jersey history."
New Jersey hotels recorded all-time highs in occupancy tax collections in July and August, said Brian Tyrrell, associate professor of hospitality and tourism management studies at Stockton University.
Trends in hotel stays tend to track similarly with day trips, Tyrrell said. In terms of tourism, he said, "we certainly have recovered." The only Shore county whose hotel tax collections are down since 2012 is Atlantic County, with an 11 percent decrease - a period in which Atlantic City lost four casinos, he said.
But Sandy's impact is noticeable. In the "vast majority" of New Jersey counties, hotel tax collections have climbed by double digits since 2012, compared with smaller or flat gains at the Shore, Tyrrell said - "explainable by Sandy, for sure."
Meanwhile, thousands of homeowners, as Christie acknowledged, still are rebuilding.
Most homeowners in the state's main rebuilding grant program have not finished construction. Of the 7,800 people in the Rehabilitation, Reconstruction, Elevation and Mitigation (RREM) program, 3,150 have completed projects. "Nearly all" of the remaining 4,650 have started, according to Lisa Ryan, a spokeswoman for the state Department of Community Affairs.
The number of people still not home is "a pretty big number," said Joe Mangino, cofounder of the New Jersey Organizing Project, a group that has criticized the state's administration of the RREM program.
Mangino noted that the numbers don't account for displaced residents not in the RREM program. The project's executive director, Amanda Devecka-Rinear, said Christie's statement that the state had recovered was "false and a complete insult to the thousands of families who are still struggling."
All eligible applicants in the RREM program have signed grant-award agreements, and 97 percent have received at least one payment, Ryan said.
The state has disbursed $780 million to homeowners and expects to disburse another $220 million. New Jersey has spent federal Community Development Block Grant money - which funds the RREM program - faster than Louisiana did, said David Abramson, an associate professor at the New York University College of Global Public Health who is affiliated with the Tulane Center for Studies of Displaced Populations, a network of researchers studying long-term effects of Hurricane Katrina.
But disbursement of funds isn't the only way to measure recovery. Abramson has conducted child and family health studies of households affected by Katrina and Sandy.
Three years after Katrina, 34 percent of Louisiana and Mississippi parents in Abramson's study reported that their children were dealing with mental-health issues - as did 50 percent of New Jersey parents in the study three years after Sandy, Abramson said.
"These are really enduring issues," Abramson said. "It's hard to have a single metric" that assesses whether a state has completely recovered, he said.
The most vulnerable people had losses from Sandy "that were never recouped," said Stephanie Hoopes, director of the United Way ALICE (Asset Limited, Income Constrained, Employed) Project, who authored a 2013 Rutgers study assessing the impact of Sandy and unmet recovery needs. Low-wage workers, for instance, lost $833 million in wages due to closed businesses, and federal emergency assistance was limited.
A Monmouth University survey in October 2015 of New Jersey residents hard hit by Sandy found that 41 percent said they needed money to help pay for rebuilding or elevation of damaged homes.
"Some houses, people just walked away from," Ventnor Mayor Mike Bagnell said. He said his city was "about 80 to 85 percent recovered."
"There's still a lot of houses waiting to be raised. We're still waiting on some approvals to repair some damaged infrastructure," Bagnell said. The tax base took a hit from declining property values, and "we're getting killed with tax appeals."
Ventnor is planning a property revaluation, which Bagnell said he hopes will cut back on appeals. And he anticipates that new construction will boost the tax base.
"We will get back," Bagnell said.
In Longport, homes have been elevated and jetties rebuilt. "Everything is the way it was, in my opinion, prior to Sandy," Mayor Nicholas Russo said.
The recovery process hasn't been just about repairing the damage, but also preparing for a future storm, Russo said. The jetties, for instance, were rebuilt with rocks four times bigger than before. The borough, after learning during Sandy that its fire trucks didn't work in flood water, reevaluated its equipment needs.
Russo is convinced that such measures will prove necessary. "This is going to happen again in our lifetime, I'm sure," he said.
5/2/2016 Some Good News for NJ Housing Market, But Foreclosures Still A Factor, Joe Tyrrell, NJ Spotlight
Realtors see increased demand for Shore properties, but Hurricane Sandy and Great Recession may have changed long-term dynamics of market
Even as real-estate agents see encouraging demand for Shore rentals, and home prices in parts of New Jersey creep gradually higher, analysts and academics say foreclosures continue to slow the state's housing market and economy.
In some areas, such as previously fast-growing counties on the suburban fringe or long-depressed urban areas, low prices may be precursors of lasting economic change, according to the experts.
While the overall numbers have improved, New Jersey continues be among the leaders in both foreclosures and mortgages in trouble. Home values, which in much of the country have rebounded strongly since the Great Recession, continue to tread water in much of the state.
In some communities, the picture is worse. Atlantic City and Trenton rank first and second in the nation for foreclosures. Beyond those obvious sore spots, observers point to areas like Ocean County, where they say the twin blows of the recession and superstorm Sandy may be changing the long-term dynamics of the real estate market.
High rates of cash sales of property in these areas suggest large investors making speculative purchases are replacing individual home buyers as driving forces in those markets, analysts said. They foresee one result as more rentals, fewer owners with strong links to the communities.
In the midst of preparing his firm's latest, generally cheerful overview of housing trends around the nation, Daren Blomquist, a vice president of RealtyTrac of Irvine, CA, agreed to take a closer look at New Jersey markets.
"In many ways what we're seeing in those areas, and for New Jersey overall, is running counter to the positive national trend," Blomquist said. "There are still a lot of foreclosures, a lot of distressed mortgages and prices remain well below the pre-recession peaks."
By RealtyTrac's reckoning, median home prices reached their peak in New Jersey at $350,000 in July 2007, a bit later than most of the nation. Even after a jump in March, they are now at $265,000, 24.3 percent lower, the firm reported.
The numbers vary, but CoreLogic, another Irvine, CA, real-estate analytics firm, agrees that New Jersey is lagging. In April, it reported the state's average housing prices rose by 1.6 percent during the previous year. But that gain was less than 46 other states and the District of Columbia. For the nation, the increase was 6.8 percent, CoreLogic found.
"NJ has experienced a high foreclosure rate and large number of distressed sales that have slowed home-value improvement," said Frank Nothaft, CoreLogic's chief economist.
Another housing-data firm, Seattle-based Zillow, calculated that housing values have dropped 11 percent in Atlantic City in 12 months, and 26.7 percent of mortgages there have negative equity, debt higher than the property value.
The problems extend beyond the city. Egg Harbor and Pleasantville were both down more than 7 percent, according to the firm. Dennis and Woodbine townships in Cape May County both saw double-digit drops in home values, though based on fewer sales. In Cumberland County, Bridgeton homes are worth only an average of $68,300, but their prices are also falling.
In Mercer County, Zillow showed the average value of a Trenton home is $83,000, down 1.4 percent. Prices are nearly twice as high in Neighboring Hamilton Township, but they dropped 1.9 percent, the firm found.
In Newark, where for a time housing values were coming back slightly faster than the state average, recent CoreLogic report shows them stagnant or receding, down half a percent in the most recent findings.
In contrast, housing data from the firms show Philadelphia prices rising 29 percent. Brooklyn has become one of the least-affordable places in the country compared to its historic norms. The New York City area as a whole, including Jersey City, saw a 4.3 percent year-over-year price increase.
Asked to assess these trends, Professor Charles Steindel of Ramapo College, the state's former chief economist, pointed to the same culprit in the problem areas. "Foreclosures are still high" in much of the state, he said.
But Steindel added he is "a little encouraged that home prices are falling" in some of those places. To an extent, that reflects properties moving through foreclosure and coming to market at lower prices, he said. "The number of (new) cases is finally coming down," Steindel said, creating a path toward potential improvement.
Figures from state courts buttress that view. Through mid-April, lenders have filed about 11,000 foreclosure cases this year. That's well above the pre-recession pace of about 20,000 a year, but far down from the peak of 63,000 in 2009.
While several others agreed with Steindel, they repeatedly used one phrase to describe the continuing effect of the glut of foreclosures on the housing market here.
"It's like watching the nature special, when a snake eats an animal and you see the pig moving through the python," said Peter Reinhart, director of Monmouth University's Kislak Real Estate Institute. "We're finally seeing the end of that bulge, but it's a long, slow process."
Like about half the states, New Jersey requires courts to approve foreclosures, with the properties then going through county sheriff's departments for disposition.
That process generally takes years, particularly after instances of fraudulent documents and testimony in some cases caused state Chief Justice Stuart Rabner to order major lenders to clean up their acts in December 2010. Foreclosures slowed to a trickle over the next nine months as banks sought to demonstrate their procedures are proper.
Ask real-estate agents and others in the industry about New Jersey housing, and you will get an earful about how Rabner's "moratorium" created a backlog of foreclosures that continues to clog the market.
Of course, the long time period theoretically should have allowed banks to reach accommodations with borrowers, such as modifying mortgages bought at inflated prices to reflect the current, lower values of the homes. But that seldom happened here, analysts said.
"Two of our members who had been struggling recently were able to modify their mortgages," said Amanda Devecka-Rinear of the New Jersey Organizing Project, who works with residents displaced by superstorm Sandy. "But in 18 months, they're the first ones."
"You're not really seeing banks offering many modifications," Blomquist said. "Those that were for a time generally did it to meet the requirements of their settlements with the federal government" over mortgage-fraud allegations. "But they've satisfied those terms, and even the federal (mortgage) aid programs are coming to an end, so there's no incentive to do more," he said.
In New Jersey, the sheriff's sales process has another effect, Reinhart said, effectively removing affected property from the consideration of individual buyers. "Very rarely does anybody go to a sheriff's sale looking for their new home," he said.
Instead, mortgage holders are lining up other institutional buyers, some with long horizons, perhaps waiting for prices to rise before returning them to market, or converting single-family houses to apartments to accommodate those displaced from their homes by foreclosure.
But this spring, there is also plenty of optimism about a turnaround, particularly in Shore rentals. Superstorm Sandy in late October, 2012, devastated some communities, washing away homes, roads, and other structures.
The result was tough times, according to Eric Birchler, the owner of a family real-estate brokerage in Lavallette, Seaside Park, and Ortley Beach, virtually ground zero for storm damage. The following year "was the worst I can remember," he said. "Summer rentals were down 60 percent and sales down substantially." Some of his usual properties were gone, others uninhabitable or inaccessible.
But more people came back in 2014 and 2015, he said. This year, properties are increasing as well, Birchler said.
"We've got a lot of people who are rebuilding, and are renting out to help pay for it," he said.
That is helping both to meet demand and keep rents stable, Birchler said. He has "100 percent confidence" that new or rebuilt homes will withstand future storms. But he noted another change, one that has attracted attention from observers beyond the Shore.
Since Sandy, "the 600-square-foot bungalows are no longer there," he said. Replacing them are "buildings that are on pilings, with four bedrooms, 2½ baths on top," Birchler said. "Financially, it's better to build a house that's bigger," at least for those who can afford it, he said. But not everyone can, he said.
"There's a lot of people that built their homes 30, 40 years ago, or inherited them," Birchler said. With tougher codes and flood-insurance requirements, "it takes a major cash infusion to rebuild." Some people simply get worn out from fighting with insurers and government agencies, he said.
"It is changing the demographics," Birchler said.
The analysts agree him: as long-time owners leave, their replacements may be something completely different.
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