From Bloomberg:
New Jersey, You Should’ve Built That Tunnel
There are lots of reasons for bondholders to love Colorado and show no respect for New Jersey. Here’s a big one: infrastructure. Colorado made a huge investment in it and is getting rewarded by investors. New Jersey didn’t and is being punished.
More than 20 years ago, Colorado residents defied business leaders, airline executives and not a few politicians (led by consultant Roger Ailes, now president of Fox News). They voted to borrow a lot of money — a total of $4.4 billion by now — to build the Denver International Airport. At twice the size of Manhattan it’s the largest airport in the U.S., and it’s been pumping up the economy ever since.
Denver International makes more money for the state than any other enterprise, pumping $26.3 billion a year into the economy while supplying 225,000 jobs. It gave Denver, the 22nd-largest U.S. city, the nation’s third-largest domestic flight network, with a record 53.4 million passengers last year and revenue of $322.8 million.
…
Now look at what happened in New Jersey, the third-richest state based on median income, after it rejected a chance to improve its transportation infrastructure. In 2010, the federal government offered New Jersey $3 billion to build a rail tunnel to double commuter capacity to New York City. It would have relieved pressure on the overburdened existing tunnel, built in 1910 and damaged in 2012 by Hurricane Sandy.Governor Chris Christie, predicting cost overruns in a rare period of disinflation and exceptionally low borrowing costs, canceled the project. The new tunnel would have created at least 200,000 jobs, and would have generated $9 billion in business revenue and $1.5 billion in federal, state and local tax revenue during nine years of construction, according to a March 2012 report by the U.S. Government Accountability Office.
Since cancellation, New Jersey’s economic performance has lagged. Adjusted for inflation, its median household income declined 12.2 percent, compared with an average drop of 3.9 percent for the U.S. New Jersey is among only 12 states with deteriorating economic health defined by jobs, mortgage delinquency, personal income, home prices, tax income and stock performance, according to data compiled by Bloomberg. The same data shows Michigan and California, where infrastructure has been a priority, as leaders in job growth. By the same measures, New Jersey is No. 6 from the bottom.
There are always many reasons for weak economic performance. In New Jersey, transportation is vital. The state sends almost half a million people out of state for jobs, the most in the nation. The majority go to New York.
It should come as no surprise, then, that the state has lost the confidence of investors. While Colorado provided an 8.9 percent return since 2010, beating the national average of 4.95 percent, New Jersey’s equivalent bonds gained 1.01 percent, the worst performance after Puerto Rico and Arkansas, according to the BofA Merrill Lynch U.S. Transportation Municipal Securities Index.
It’s true, a lot of our residents end up going to NYC to work. Increasing cross river capacity would help.
Or we could invest in New Jersey instead. Make it so corporations want to set up house here, and I don’t just mean the JC/Hoboken area. Fill in potholes. Increase roadway capacity where it makes sense. Introduce light rail or BRT where it makes sense. Add new NJT stations where it makes sense, remove those that are underperforming.
It’s not like there’s a shortage of stuff to do. The tunnel would be nice, but putting all our eggs in the tunnel would be a tacit admission that we aspire to remain a state of bedroom suburbs.
1. Freeing up trans-Hudson road capacity through trains will benefit all sorts of transportation related businesses.
From the NYT:
With Affordable Space, New Jersey Lures Food Businesses
Junior’s might make the quintessential New York cheesecake, but its owner, Alan Rosen, has quickly learned that baking it in suburban New Jersey is much easier.
For Mr. Rosen, trading his 20,000-square-foot bakery in Maspeth, Queens, for a 103,000-square-foot facility in Burlington, N.J., has been akin to giving up a cramped city apartment for a mansion in the country. Even the adage about getting more for your money has proved true: Junior’s paid $3.8 million for the sprawling property, about the price of a three-bedroom apartment in Manhattan.
“We’ve got grass to mow,” said Mr. Rosen, strolling the grounds of the seven-acre lot on a drizzly June morning. “I’m not sure exactly where it stops; that’s how you know you’ve got a lot of land.”
Jeff Gural, the New York real estate tycoon, on the roof deck at the Meadowlands Racetrack in East Rutherford, N.J. Mr. Gural envisions a $1 billion casino at the racetrack.Real Estate Magnate Pushes for a Casino in North JerseyJUNE 5, 2015
He has several loading docks. Seven? No, six. No matter. At his Queens location, which will close in July, a month before its lease expires, he has only two. The cream cheese for his famous cheesecakes has to be delivered there daily because he has nowhere to store it. But in Burlington, 40,000 pounds of cream cheese hardly fills a wall of one of the company’s two refrigerators, which are about five times the size of their predecessors in Queens. The bakery also has six blast freezers, which can freeze a cake solid in about two hours.
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Over the last year, food and beverage companies have leased 2.1 million square feet of space in the state and 13 more companies are aiming to rent a total of 2.8 million square feet, according to data provided by the real estate company Jones Lang LaSalle. Last year, Peapod, the online grocer, opened a 345,000-square-foot distribution center in Jersey City. In April, Goya, the Latin American food purveyor, opened a 900,000-square-foot headquarters and distribution center in Jersey City, less than a mile from its former headquarters in Secaucus, which it is renovating. It plans to sell a second Secaucus plant and in July will close its Long Island facility. And this fall, Fratelli Beretta, the Italian meat company, will open a United States headquarters and processing plant in Mount Olive, N.J.
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“It’s definitely a trend,” said Robert C. Kossar, executive managing director with Jones Lang LaSalle. The companies that are relocating to or expanding operations in New Jersey “are all over the board from farmers’ markets to production to e-commerce. It’s really cutting across all aspects of the food and beverage industry.”
Christie’s the Guv and the Food industry takes off… coincidence?
I don’t think that the DIA comparison is entirely valid. Denver’s physical location makes it well situated to host a hub airport for shuffling self-loading cargo traveling cross-country to/from the west coast. Sort of a “built it and they will come” situation. They wouldn’t have had the same success just about anywhere else.
The comparison to the canceled ARC tunnel is not valid. How many people traveling from Maine to Florida are going to detour through the ARC because it is there. I’m not saying that there weren’t/aren’t some good reasons to build the ARC, but the deal CC turned down was a p!$$ poor one (NJ alone to foot the bill for budget overruns; realistically 50-90% of the total cost – See Boston’s “Big Dig”), and I don’t blame him. And consider that building the ARC wouldn’t have relieved NJ’s other pressing bond rating problems; so they would have had to borrow all the more money in an adverse environment.
Let’s not make excuses for Christie. He has no vision. His idea for economic growth is cut cut cut. He has destroyed this economy. Too focused on running for president, fighting govt workers, and patting himself on the back. He has done absolutely nothing for this states’ economy but hurt it. He is the worst gov we have had in a long time. This state has major potential. The sooner we get a governor that focuses on the infrastructure and economy, the better off we will be. Christie’s overseeing of the economy has been as pathetic as they come.
Low rate environment and we don’t go all in on borrowing and investing in our states economy? Are you kidding me? God knows how much money he will cost this state long term esp with killing our credit outlook with his mismanagement of the state and its economy. Guy is terrible.
Moose, how do you defend this guy? That’s sad.
Denver airport also had massive delays/cost overruns, and the automated baggage handling system had to be re-done.
Not to mention that the mf’ing airport is so far from Denver, it feels like a trip to Nebraska.
Electrify the goddam Raritan Line, and put in express service.
Ask yourself one question. Has the state improved or regressed under the management of Christie? He can make all the excuses in the world. For example, he inherited the problems blah blah. Why the hell did you take the job on if you are going to blame previous governors for the problems in the state. That’s not what a good leader does. You don’t make excuses and you attempt to fix the problems and at least leave the state in better shape then you got it. Is that too much to ask?
No excuses!! Results you fat ass.
No wonder he became so fat, kept making excuses for it, till the problem became out of control. Now we let an excuse maker control our state’s economy? Bs!!
If Christie had been a visionary, he would have been privatizing infrastructure, ripping out of the hands of cronies and small time political crooks, and bringing in investment into transport to create more supply. Virtually all important infrastructure is in government hands, with predictable results. It doesn’t have to be this way, I’ve seen much better models around the world.
I would have taken that any day of the week. Infrastructure is your economy. When your infrastructure is shot, so is your economy. Relying on one tunnel that could go at anytime is the definition of Russian roulette with your economy.
Ragnar says:
June 13, 2015 at 9:28 am
If Christie had been a visionary, he would have been privatizing infrastructure, ripping out of the hands of cronies and small time political crooks, and bringing in investment into transport to create more supply. Virtually all important infrastructure is in government hands, with predictable results. It doesn’t have to be this way, I’ve seen much better models around the world.
11- doesn’t the state need jobs? Let some private investors at the infrastructure problem. Give them somewhere to invest and create jobs, while at the same time this will be putting money into the consumer hands to improve demand in the economy leading to even more job creation.
Ragnar, your naivete fascinates me. True Randian sniffers like you can never see the reality because of your ideological cognitive dissonance.
The whale of a mall off the Turnpike (Xanadu) WAS a privatization job. Private company building in public land.
For infrastructure you need a modern day Robert Moses. JJ can tell you the difference Robert Moses did in Long Island beaches. If it was not for him, many of the beaches would have blocked off to true public access like a lot of towns do in the jersey shore.
https://en.wikipedia.org/wiki/Robert_Moses
13
How is a public/private partnership equal to private?
Joyce, as they say, the devil is in the details.
To make the point, I need something with details.
Let’s take McCabe’s Ambulance Service in Bayonne, NJ. That is majority owned by CarePoint Health. This is the same CarePoint Health that runs Bayonne Medical Center, one of the highest medical billers in the country, and is lobbying furiously to make sure they are still able to overcharge for out of network care. And by the way, if the Supreme Court rules against ObamaCare subsidies, they’ll be the first in line to make sure FatBoy Christie creates a NJ Statewide Healthcare Exchange or their business model is kaput.
Anyway McCabe has provided the ambulance service for Bayonne for decades. Up until recently it was costing the town $800,000 yearly. The city of Bayonne, after a recent election and change of political machine running the town, reopened/revisited the ambulance service contract, when McCabe bid $0 yearly to provide the services to Jersey City, where CarePoint Health owns 2 hospitals and Barnabas Health owns the other, but bigger hospital.
Ragnar, and possibly you would think that this is an efficient and working privatized service or public/private partnership. However, if you don’t know the details outside of the frontal facade, you would be wrong.
Details like Mickey McCabe, the initial owner and namesake of the service has been well connected in Hudson County politics for decades. Like the Bayonne Fire Department had bid to do the ambulance service and expand their duties in Bayonne for the last decades (making it a fully public service), and always underbid McCabe, however, they always “lost it” to some technicality.
True, clear, honest private public partnership are out there, but they are rare. The public money stream, eventually corrupts. Like I said before. McCabe/Bayonne would have look to the unsuspecting eye as a “working” partnership. To a true believer like Ragnar is the “dream” of how things should be. But, if you look under the hood and look at the engine and wiring, you would see that is a machine set up to exploit weakness in the public/private relationship.
In conclusion, if you look at any public/private partnership or privatize public service contract, you are going to see the “potential”, and very likely the ongoing exploitation of that “potential” for corruption. There is no panacea and you have to keep a skeptical mind in these matters. I just find the unquestioning ideological fantasy behind all these “privatization” talks unrealistically disturbing, .
1. “The tunnel would be nice, but putting all our eggs in the tunnel would be a tacit admission that we aspire to remain a state of bedroom suburbs.”
That’s what we are. Embrace it. Without the most populous and wealthiest metropolis in this nation’s history a stone’s throw away all of NJ would resemble Vineland. Make no mistake about it.
2. Juniors moves mfg and distribution from Queens.
Yay! We have better industrial space and transportation than Queens! Could the bar be any freaking lower?
Your entire novel didn’t answer my question. It was rhetorical, so I’ll answer it myself: “Public/private is not private.”
If I hire Joe Landscaping to remove a tree from my backyard, that was private agreement.
If I get taxed for garbage collection and the town hires Waste Management, Inc to so it, that’s not private… at best it’s outsourced.
@BernieSanders:
It is time to say loudly and clearly that corporate greed and the war against the American middle class must end.
@MotherJones:
Hillary Clinton just launched her formal campaign for the White House
“@BernieSanders:
It is time to say loudly and clearly that corporate greed and the war against the American middle class must end.”
Yeah, cuz that’s what the rich are doing on this beautiful June afternoon. All sitting around together locked up in closed rooms figuring how to put it to the middle class because that’s where all the money is.
Reminds me of a scene from last night’s Modern Family episode:
Manny : Can you put this penny in the jar with the others?
Gloria : Sí. Ay. I forgot. What is the combination to your safe?
Manny (eyeing Jay suspiciously): I’ll just come with you.
Jay : Oh, yes, ’cause that’s how this arrangement works… I take money from you!
“@MotherJones:
Hillary Clinton just launched her formal campaign for the White House”
Saw that. She timed it so she was able to just sneak in under the wire one last $250k speaking appearance. Now those appearance fees have to end while she goes out bashing the wealthy and championing the poor.
OMG. Surfing some houses. Glanced at the listing broker on one.
Sue Adler.
#80 – From yesterday re: Garbage
Thanks, didn’t know that!
My truck bed is covered and the only people seeing me (sometimes) dropping off trash late at night are my tenants…
Plus, I know the cops in both towns (one advantage of being a landlord).
I do pass through a section of a municipality patrolled by the local State Police but…I now know them too.
[6] splat,
I was recently in Denver and the opinion about the airport could not be more different than the lede. Huge cost overruns, rampant corruption that everyone seems to know about, and a debt overhang that your average Coloradan actually seemed to notice.
From the time it was built, I haven’t heard anything good about it until reading this lede.
Re:22 – Surprised? EVER have a bad sales (insert product here) person?
#24 – re: Denver -Feck old airport was too close to the city. NEW airport when you suffer a delay usually overnight you are trapped to dealing with TGIF or the Burger King.
25. Blast from the past. Seem to remember on this board she was the poster child anytime anyone linked an overpriced POS.
Not knocking her, don’t even know her. Just an LOL when I looked down at a listing and saw that. To be honest, there was a bit of WTF over price.
At the risk of joining Fast Eddie’s fraternity things are absolutely crazy. Not whining, as I am a net seller of real estate with a piece of land left I need to offload, so I am really being objective.
As I’ve mentioned I’m trying to determine socially, financially, and from a family perspective what I am going to do for housing given some very specific circumstances. Mostly, with my last child now appearing to stay in the area for his HS I have four years here but then I’ll leave. There is an option that has me buying a SFH so for the first time in six or so months I’ve really looked hard at things.
I truly don’t know how this market ends well. Despite runups it does not feel healthy. ‘Have’ towns have seen ridiculous leaps in prices. ‘Have not’ towns are somehow stagnant. To be clear, what distinguishes a better town is very little and often not quantifiable. The ‘have not’ towns are not bad places at all. They are very good actually and mostly contiguous to the ‘have’ towns. We are not talking Paterson here, far from it. Median prices are separated by maybe $100k or so, and hanging around $900k.
Anyway, the better towns are priced into the stratosphere. They are up at least 15% past twelve to 24 months. Cheapest homes are literally tiny capes on 10k square feet or less for $800k+. Taxes are minimum $14k annually. These are not homes your family grows up in. Small 3BR, with the third bedroom usually barely functional. Would work for a young family, not a family with teenagers or more than two kids. Prices have really popped, and PITI on one of these (assume $600k mortgage and 4%) is $4000 monthly. Nudge the rate to 6% and it moves to $4800. Are people really going to take you out at that level? What do you do with this purchase when you need to move if rates don’t decline (lol) or lending standards don’t blow out?
For the other towns similarly priced homes are usually better quality, given the slightly lower town standard. These homes are having a hard time holding prices last paid. Who will be taking these buyers out if in a rising market with low rates you are just ‘breaking even’ now on your 2004-2011 purchase?
I’m just dumbfounded. Maybe my perspective of evaluating this market – who will take me out – is skewed because of my specific circumstances. Maybe not. If people can’t sell you don’t have a market. IDK. I’ve been spectacularly wrong (or early I guess) in the past, 2003 comes to mind.
I just don’t see how this market ends well unless everyone is buying their current home to live in for the next 15 years. Which, outside of a crazy decade or two, was likely the norm and pretty good advice.