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Creative Land Arrangements Power Long-Awaited Projects

Creative Land Arrangements Power Long-Awaited Projects 789 444 DMR Architects

by Charles H. Sarlo, Esq.

Some of the best untapped development opportunities may be held by municipalities whose well-located but outdated schools and administrative buildings can be relocated, unlocking value that can be then used to finance new facilities elsewhere.

DMR has had an up-close view of municipal innovation in two recent situations that solved the problem of locating and financing much-needed reinvention of public buildings without undue pressure on the tax base. In New Brunswick, an antiquated elementary school became the site of a new cancer center for RWJBarnabas Medical Center and Rutgers Cancer Institute, with a new school developed on another city-owned site featuring modern educational resources and functionality that the old building could never accommodate.

In addition to addressing rapidly evolving educational needs, the New Brunswick program had at its heart two dynamics that are dominating the current real estate landscape: the boom in healthcare-oriented development that pushed RWJBarnabas Health, in partnership with Rutgers Cancer Institute of New Jersey, to create a new facility for cancer treatment; and the massive pressure to repurpose and scale-up sites in the face of downtown redevelopment.

In Ridgefield leadership declared its former Borough Hall site on Broad Avenue as an area in need of redevelopment to facilitate a sale, and constructed a brand-new municipal complex on property it already owned that offered superior access and parking. Here the requirement was for municipal services and public safety rather than education, but the driving economic concepts were the same, albeit on a smaller scale in terms of the project itself and the community in which it sits.

Each site represented interesting challenges, and each found their solution in an unusual place: Ridgefield was a perfect match for alternatives to the traditional municipal bidding process, resulting in it contracting for a fixed-price that greatly reduced its risk. And New Brunswick had DEVCO, the City’s vaunted redevelopment resource, at its disposal for both financial and planning solutions.

While residents can sometimes have sentimental feelings about municipal buildings, in both these cases when my colleagues at DMR dug just below the surface, we found that their occupants were eager to trade into something more modern and that there would be no meaningful resistance to moving from within. That tells an important story: that pragmatism about getting the job done overcomes sentimentality among the user-constituents, and once the fiscal and productivity story is told, civil servants and residents alike quickly get on board with making a change.

As schools, police stations, city halls, parking facilities, public works depots and municipal garages age out of their relevance, and as renovation costs continue to be nearly as high as constructing new facilities, we expect to see more of our municipal clients not only updating their facilities, but also turning into the next generation of insightful real estate developers.

Why We Stay

Why We Stay 2438 1563 DMR Architects

This post originally appeared as part of a two-part series with Real Estate New Jersey. See also, part 1, “You Build Trust by Trusting People,” which outlines DMR’s culture of empowerment. In this article, RENJ sat down with several DMR staff members to understand their experiences growing their careers at DMR. 

Pradeep Kapoor, AIA, LEED AP BD+C, Chief Operating Officer, Partner (21 years)

Pradeep Kapoor was a junior architect in 2003 when the sustainable design movement was taking hold. He recalls that Lloyd Rosenberg, DMR Architects’ president and CEO, saw the trend as a potential game-changer and asked his team if someone was interested in helping to build a practice in the emerging growth area.

Kapoor stepped forward, studied and soon became certified in the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. By 2005, DMR had secured its first assignment in the field, the Carlstadt Elementary School, which in 2007 became New Jersey’s first LEED-certified public school.

“We not only give people opportunity. We ask people to bring opportunities that they would like to explore,” Kapoor said, adding: “That was something I learned from Lloyd because, when I wanted to pursue LEED and other avenues of architecture, he always encouraged me.”

Kevin Johnson, Project Manager (10 years)

Job jumping may be a common practice among young professionals, but not for Kevin Johnson, who joined DMR in 2012 and has never looked back.

Here’s one major reason: He has the tools he needs to do his job.

“I’ve always felt supported with technology,” said Johnson, a project manager. “That’s been a huge issue with some people I know — they don’t get the support they need, the computers are too slow, they don’t have the programs they need.

“So not only did I start with a good system in place, but any time I’ve had a concern about something, I’ve brought it up and it’s been looked into.”

Janet Pini, AIA, Sr. Project Manager/Associate (20 years)

Janet Pini has only ever known DMR Architects, the company she has called home since she graduated from New Jersey Institute of Technology in 2002. The firm “afforded me the opportunity to learn right as I got started,” she recalls, noting that she quickly worked on different aspects of the profession — from design and production to construction administration — along with different industries and asset classes.

“That’s been a theme through my whole career here, and I think one of the reasons why I’ve stayed is I’m not doing the same thing every day,” she said. “I’m working on municipal projects and school projects, which really has become my focus here, but I still do get housing projects, health care projects. So there’s that variety.”

Pini now spearheads a mentoring program for the firm’s junior-level talent, hoping to engender the kind of creative freedom and hands-on, supportive learning environment that have kept her at DMR for two decades.

Kurt Vierheilig, AIA, LEED AP BD+C, Director of Design, Partner (23 years)

Collaboration is key, but it’s not the only ingredient for thriving in a group setting. It also comes down to being able to understand the creative choices, opinions and suggestions of others — even if they don’t always align — and ultimately find a solution.

“I always felt that the people that worked here were really working in sync,” said Kurt Vierheilig, who was named a partner in 2017. “Everyone respected everyone else. Even if you don’t agree, you understand why you don’t agree, but there’s a goal that you’re trying to reach toward.

“I think if people understand why you might have a difference of opinion, that also helps them develop, but it also helps to keep things going in the right direction, in a respectful way as co-workers. And I’ve always felt that, no matter where you were, no matter what level you’re at, there’s always a good collaborative process. Because buildings are complicated — there’s so many different ways you can do it, different approaches you can take and a lot that goes into it.”

Fassil Zewdou, Sr. Project Manager, Associate  (21 years)

Fassil Zewdou is candid when he notes that “I really don’t like to move around.” But even he is amazed to have spent more than two decades with DMR Architects.

Why has he stayed? There’s the ability to learn, the attention from senior leaders and the strong business fundamentals that help the firm endure even in leaner times. But he also points to something that can’t be so easily quantified — company culture.

“You can define value in terms of what the company stands for — if it is employee-centered as opposed to just financials,” said Zewdou, who focuses primarily on education projects in New York City. “You can’t quantify that distinction — you just know it.”

You Build Trust by Trusting People

You Build Trust by Trusting People 789 444 DMR Architects

This article originally appeared as part of a two-part series with Real Estate NJ.

See also part 2, “Why We Stay“. 

That philosophy has allowed DMR Architects to become a top architecture, interior design and professional planning firm, with a practice that is among the industry’s most diverse and a team large enough to accomplish projects of any size.

Lloyd A. Rosenberg has been building that team for more than 30 years, with a focus on mentorship, flexibility and the freedom to explore new areas and new technology.

We asked Rosenberg to share his thoughts on hiring and developing talent, as well as the ongoing role that DMR’s team plays in the commercial real estate industry.

You’ve built such a diverse practice. Does that happen organically or by design?

It’s probably both, but I certainly have always encouraged our staff to be independent and creative, provided it is within the scope of our project. By managing, monitoring and guiding them they are able to grow and we achieve the best outcome for everyone. And if they have a passion to do something, that’s great, because we empower them to push themselves to learn and develop personally and professionally.

At the same time, I’ve hired talented people that didn’t always fit the position we were trying to fill. So I step back and say to myself, ‘Well, are they talented? Could they do something else? Could they add value? Could they add another dimension to the firm?’ This approach has had such a positive impact on DMR.

What are you most proud of as you’ve assembled this team and created this business over three decades?

It’s several things: First, we have developed a brand and a name. That was one of my goals: I wanted anyone who introduces themselves as an employee of DMR to be immediately respected and thought of as someone who has real expertise.

I also invited in additional owners, each with their own talents and abilities, and mentored them. Today, my presence is less important. I’m not going to every meeting anymore, but I’m still here. The fact is, they are successful on their own, which is what I wanted

But I’m most proud of the fact that I’ve been able to develop people who have produced countless meaningful and important projects. We’ve developed so many special places that years later we continue to hear from people who are enjoying our work. I often hear from people who don’t know me, or who wasn’t there when I designed that building 25 years ago, say, ‘What a wonderful facility this is.’

Working with Your Architect to Support the Next Generation of Creative Thinkers

Working with Your Architect to Support the Next Generation of Creative Thinkers 960 540 DMR Architects

By Donna Coen O’Gorman

Where STEM and STEAM curriculum were once offered as after-school clubs—and in whatever classroom space was available—that students with an already existing interest or aptitude in math and the sciences could opt into, more schools are now incorporating these education modes into regular classes and expanding the applications beyond science and math.

This shift in education practices requires a physical shift away from the traditional classroom layout with student desks lined in rows facing the teacher to flexible spaces and furniture, materials and spaces that can be incorporated into the lesson plan, and ever-advancing technologies that engage students and better support more forward-thinking practices.

DMR has been the go-to firm for nearly a quarter of all public school buildings in New Jersey since its inception in 1991—responsible for some of the state’s most advanced learning institutions and spaces—with a current roster that includes the new Junior High School in Carteret and several projects in Passaic at the Passaic Academy for Science and Engineering (P.A.S.E), Dr. Martin Luther King, Jr. School No. 6 and Theodore Roosevelt School No. 10.

Building New

In Carteret, DMR’s plans applied the most forward-thinking divergent learning practices to the school district’s program curriculum and the State’s Department of Education Facility Efficient Standards with classrooms for traditional subjects with dedicated spaces for enhanced art and music education, a think tank, a flexible media center that will replace the library, a dance studio, and a STEM lab for the municipalities 600 seventh and eighth graders.  These plans satisfied the community’s need for adaptable spaces that could be easily updated as education practices and students’ needs continue to evolve.

“This Junior High School has been a long time coming, but previous attempts for community support failed, because plans only addressed one issue – overcrowding,” said Rosa Diaz, Superintendent of Schools in Carteret.  “The DMR team’s thoughtful application of knowledge regarding current learning environments and their ability to identify ways that a facility we build today can continue to adapt and support the best educational modalities to come, helped us present a funding referendum that everyone in Carteret could support.”

Our plans were used as background materials that led to the approval of the first new educational facility in Carteret in more than 40 years.

Working Within 

While DMR met Carteret’s needs with a new facility, in Passaic our plans at Passaic Academy for Science and Engineering (P.A.S.E) addressed practical concerns like how to maximize the functionality of an existing space, find adaptable furniture, and provide appropriate ventilation so that the school could expand its biomedical science program.  In this case, DMR’s decision to hang the utilities and the ventilation hood from the ceiling freed up space in the lab for furniture including an anatomage table, a highly sophisticated technology that will position its students on par or ahead of even some college and university pre-med programs.

DMR’s work in Passaic also includes the art studio at P.A.S.E that acts as a classroom and an art gallery for its students through moveable workstations, soft lighting and interactive exhibit areas.  We have also designed state-of-the-art auditoriums in its School No. 6 and School No. 10 and a data center in support of the data analytics program at P.A.S.E, complete with an interactive, LCD tile video wall to be used to teach digital signage technologies.

Looking Forward

The requests for alternative learning options have been growing for several years. In 2018, we completed the Frank J. Gargiulo Campus, where all aspects of the physical facility are incorporated into the learning experience and the building itself doubles as a teaching tool. Numerous architectural elements provide this level of education. Architectural and engineering students learn firsthand about building systems as infrastructure, such as mechanical lines and the school’s server room, are exposed. Students in the culinary program grow their own food in the hydroponic garden. The theatre is not simply a space for large school gatherings, but rather an intimate learning space with functions such as a control room and catwalk. Television production students coordinate the broadcasting of school news and events across academies.

We expect these requests to continue as divergent education spaces like these can prepare and create excitement for careers that are becoming more and more technical and students prove to be more prepared for the modern demands of higher education and the workforce. After location, the school system is the most important attribute that homebuyers look at; even people who don’t have children. Community leaders are wise to invest in creating learning environments that help current students stay competitive in a very crowded college environment.

Reflections on the First 30 Years of DMR Architects

Reflections on the First 30 Years of DMR Architects 2000 1125 DMR Architects

By Lloyd A. Rosenberg, AIA

In anticipation of our 30th Anniversary, I was asked often about how we built the firm that DMR is today. But as I reflect on this answer, I find that the key to our longevity is just as much in the answers to “what?” and most importantly, “who?”

We opened in 1991 with four employees who had a vision to push boundaries with technology, innovative design and attentiveness to our client’s operational opportunities and objectives.

It was a vision that began more than 30 years prior at the College of Architecture at the University of Oklahoma, which I attended during its golden era, studying under famous architects including Lloyd Wright, son of Frank Lloyd Wright, Bruce Goff, Herb Greene and Paolo Soleri. The program shaped not only a design sensibility in me, but the grueling 5-year program instilled in me a high energy for the work.

My career prior to founding DMR provided a wide variety of experiences and projects that were excellent preparation for creating and running the practice we have today. I built an entire city in Nigeria, where I would spend three months at a time and once even hid out in a safe house during a coup. I also designed a $100 million luxury apartment complex that received attention as the units were rentals, an uncommon concept at the time.

Eventually, the nature of the projects I worked on grew to focus largely on the educational sector. Appropriately, when I founded DMR, we set out to provide professional services primarily to school districts and we landed our first major project, a new elementary school in Brewster, NY.

At that time, we never could have mapped out a plan for creating and sustaining the broad set of practice areas and disciplines that now comprise DMR. But from the first day I knew that we would achieve one of the most elusive aspects of architecture: a durable enterprise.

I envisioned a firm ingrained in the fabric of New Jersey’s real estate industry and most importantly, a place where talented people do great work. This meant building a company that could withstand economic cycles, keep pace with emerging technologies and practices and one that was constantly cultivating and empowering new talent. Diversification was critical to this goal.

Of course, the trust that our clients have put in us to construct some of the region’s most meaningful and essential projects over the years has also facilitated our execution of this vision. But, ultimately creating the base from which we grew was not just about timing; it was about intention.

Clients tend to emerge within cycles and reacting to market evolution was particularly essential to achieving stability in our practice. Identifying solutions for our client’s needs is the very basis of our mission – a commitment that calls on our passion to overcome challenges.

For us, diversification was a reflexive opportunity: because we had a practice that was cross pollinated, we saw solutions that more narrowly organized firms could never see. Because we had diverse clients, our people always had new and exciting challenges.

Every business has its own culture and value system and at DMR our focus is on guiding the firm based on a core belief that creating a rewarding environment for employees is one of the most important objectives of the firm. In service businesses, our staff is the most prized asset and we are devoted to nurturing our people so that they strive to reach their potential within our walls.

DMR is a place that celebrates not only big things like our 30th anniversary but also, holidays, professional achievements and personal milestones. We have fun together with ugly sweater and pumpkin carving contests, cruises around the Meadowlands and nights at the nearby racetrack.

When I reflect on the most important stats of DMR, it’s not project metrics that I am most proud of; it’s that our staff tenure averages over 10 years and that I have had the privilege to grow this firm along with a team of professionals just as invested in our success as I was, which includes many who have been here for upwards of 20 of DMR’s 30 years.

Of course, reflecting on our people also means preparing for the next 30 years of DMR. A threshold moment of the firm came in 2016, when for the first time, DMR named five partners. While I am as engaged and driven as at any other time in my career, I also recognize that a new generation is emerging here.

At our scale, we can provide opportunities for advancement for everyone who has the ambition and the energy to make things happen. The most gratifying aspect of this is that our management meetings focus on sustaining DMR by extending and enhancing the culture that brought us here.

This article originally appeared in Meadowlands Magazine. 

Successful Municipal Planning for a Clear Vision of the Future

Successful Municipal Planning for a Clear Vision of the Future 789 444 DMR Architects

By John Labrosse, Mayor, Hackensack and Francis Reiner

The City of Hackensack is in the midst of a renaissance.  Over the past ten years, under the leadership of Mayor John Labrosse, Jr., the City has taken tremendous steps with the adoption and realization of a comprehensive plan which provides a clear vision for the transformation of the downtown into a mixed use, pedestrian friendly environment.  Fran Reiner, Partner at DMR Architects which has been the City’s redevelopment and planning consultant since 2010, worked with Mayor Labrosse and the city’s leadership team under its Director of Redevelopment Albert Dib to author the 2012 Downtown Rehabilitation Plan which implemented the strategies for the City’s rebirth.

A key component to the success of the plan has been the public outreach through on-going meetings as well as symposiums to the engage the community, developers, contracted partners, civic leaders and key stakeholders in an on-going conversation regarding the City’s goals and objectives.

Timely results

In only a short period of time since the adoption of the plan, the City has already begun to see the benefits of these strategies.  Deputy Mayor Kathleen Canestrino’s work over the past six years with developers to reinvent blighted properties through the adoption of PILOT programs, resulting in more than 2,500 units are under construction within and surrounding the Main Street downtown district.  It has been a catalyst for a wave of additional development and improvements within the downtown including the completion of a supermarket, the renovation of a farmers’ market, the opening of the Performing Arts Center and the Atlantic Street Park.

The comprehensiveness strategy has allowed the City to be proactive in its approach to redevelopment and set itself up to attract and support future development.

The Plan, which was adopted in 2012, promotes:

  •  Smart growth principles by creating zoning which increases development flexibility, reduces parking ratios and promotes mixed-use, pedestrian friendly development in the downtown;
  • The creation of public parks, plazas and open spaces with an emphasis on community gathering and includes the construction of a performing arts and community center;
  • Connectivity to existing public infrastructure, including the two NJ Transit Rail Stations, the NJ Transit Regional Bus Station and Routes 4, 17, 46, Interstate 80 and the Garden State Parkway;
  • A mixture of uses with a variety of residential housing options to encourage walkability and active streetscapes;
  • Redevelopment and rehabilitation through architectural, neighborhood design standards that ensure high quality development;
  • The implementation of a two-way street system; and
  • Strategies which include municipal tools and mechanisms to promote revitalization.

At the heart of the plan are projects to revive the Main Street area into the nexus of this livable, walkable downtown district.  Clear pedestrian and vehicular circulation and ample convenient parking are vital to attracting developers and ultimately residents and businesses.  Hackensack is in the process of converting Main and State Streets back to two-way and completing a comprehensive streetscape installation which includes traffic signals, new sidewalks and curbs, and handicap ramps which create a safe environment for pedestrians and drivers within the downtown.

In 2020, the City completed a Master Plan which outlines the City’s goals and objectives over the next 10 years.  The plan outlines a strategy for job growth and business development to support the revitalization efforts within the downtown.  These strategies include the creation of a life science zone located between the downtown and the Hackensack Meridian Health campus.  The plan seeks to promote lower density housing options between the downtown and the hospital with a new townhome district for empty nesters and retirees looking to downsize but stay in the City.  In addition, the City recently adopted overlay zones that require the inclusion of affordable housing as a proactive approach for the pending fourth round affordable housing requirements that are scheduled for 2025.

Green priorities

Hackensack made the creation of open green spaces a priority, with all development projects requiring public plazas, parks, and walking trails to connect them to the rest of the city.  In 2011, one of Hackensack’s first redevelopment projects was the conversion of an existing parking lot into Atlantic Street Park funded by a $265,000 Bergen County Open Air Grant.  Its benches and outdoor covered areas bring people out of their offices at lunchtime, and its outdoor performing area supports cultural entertainment throughout warmer months.

The plan has also attracted projects to expand the walkable downtown area.  The Record Site at the east end of the city, dormant for more than a decade, is in the early stages of a redevelopment plan that will bring 700 new rental apartments and 30,000 square feet of retail with green spaces interspersed throughout the nearly 17-acre community and—most-notably—connect Main Street for the first time with a newly created Hackensack Riverfront District.  There are also plans for a schematic design through construction documentation for a proposed sports facility and boat launch.  In the center of the downtown, there are plans to turn an area near Main Street into a public park with a pedestrian paseo that will be closed on weeknights and weekends for festivals and community events, creating a significant public park.

Performing arts and entertainment

Cultural, performing and culinary are vital for economic sustainability in any municipality.  Hackensack converted a Masonic Temple adjacent to Atlantic Street Park into a 225-seat performing arts space for performances that range from singer Marc Cohn and Defining Moments Theater Company’s In the Heights and The 25th Annual Spelling Bee as well as local performances like Cabaret by the Hackensack High School Drama Club and Still/Moving a dance performance by local choreographers Bergen Dance Makers.

While outdoor space and entertainment options are good for the soul, providing opportunities for community sports and fitness and gathering are just as important for attracting new and keeping long-term residents.  The city invested in its senior center as well as upgrading the existing 8,000 square feet and an additional 14,000 square feet at its M&M Recreation Center into a basketball arena that is also used for volleyball and baseball hitting cages, indoor soccer, and a new senior center.

The 2012 redevelopment plan provided a blueprint for Hackensack and developers to work together to meet their shared goals and set the city up to continue its growth trajectory.  The city recently completed the Hackensack Life Science Zone Assessment Report to identify Federal Opportunity Zones, a designation that will attract new private investment and job creation.

The key for Hackensack and for any municipality that is seeking to revitalize its downtown or Main Street area is to be proactive in its approach to revitalization.  It’s crucial for municipalities to first understand the goals and objectives of the community and its residents through an inclusive public outreach process and then to develop a comprehensive plan that will guide all future decisions, an approach that has allowed Hackensack to dictate the type and pattern of development that appeals to residents who are new to the city as well as those who are life-long residents.

Making Work From Home…Work

Making Work From Home…Work 960 540 DMR Architects

By Kurt Vierheilig, AIA, LEED AP BD+C

Maybe at first it was your kitchen counter. Or your living room with the TV on mute. Or even your bedroom using your bookcase as background for a Zoom Meeting. This is the new normal – working from home during the COVID Pandemic.

Another COVID wave is here. We’re still working from home, still on Zoom calls, still attempting to find the quietest corner of the home to grind out the latest project. After more than eight months – DMR Architects is learning how to adapt. Not only how to modify your current space – but how to plan and build for a future where your home IS your workplace.

It’s a difficult task. Half of the developers DMR works with expect a return to normal. The other half are planning for a future where we work from home permanently. Either way you look at it, even before 2020—through technology—our workplaces have been folding into our everyday lives; the pandemic was the tipping point that pushed us to where we are today.

As a multi-family apartment designer – DMR Architects is all about flexibility. The big issue everyone has is separating your personal and professional space. For a one-bedroom apartment it is usually a single person or a couple. In these circumstances, distractions can usually be mitigated. For a two bedroom or more, it can be more challenging but that doesn’t mean there aren’t options.

With two bedrooms it probably means there is a child in the home. But that also means you still have two rooms and that gives you the ability to have a little more separation. Build out a nook for your work area. If you do have extra space,  designate a desk for working or home schooling.

In new concepts, DMR has been incorporating a nook in the living space, reconfiguring the floor plan and creating an indented area where you can have a desk, shelf, and space for multiple computer monitors. Incorporating that into the floor plan essentially adds an additional space inside either a one- or two-bedroom apartment.

In the past DMR has incorporated dens into many of our designs. Traditionally those dens are located near the rear of the unit and not optimal for working from home while co-existing with your family. DMR is exploring the possibility of orienting the door differently to let the natural light filter into that space. In some designs DMR is looking at giving priority to the den and moving it towards the front of the unit, allowing for more light since it would be up against the exterior wall. While these concepts are still evolving and DMR is gauging developer feedback, it is a direct response to the demand of a working environment inside a dwelling unit.

That being said, there are other ways to modify your current space to work from home and maintain the public/private aspects of this new normal. You can screen off your work area with bifold or pocket-style doors. This provides the availability of natural light when you’re not working (remember getting your daily exposure to natural light is equally beneficial to how much sleep you get) but also allows you to gain privacy when you’re focused on a work project or on a conference call with colleagues.

One of the more interesting developments that is being discussed is the use of technology – specifically touch-free technology. Apps to call elevators, apps to open doors, automated entrances into the lobby of the buildings, and even hologram interfaces to minimize contact points. Even with best sanitization procedures, residents want the least amount of touch points as possible, especially because these are multifamily dwellings with lots of people coming and going.  The great thing is that this technology already exists, it just needs to be incorporated into the current infrastructure.

DMR is focusing on this new work environment with the emphasis on the improvement on your everyday health, wellbeing, and overall work/life balance. Often a building might be designed with minimum sized windows for light and ventilation according to building codes. At DMR we are exploring how we can maximize that exterior wall to bring in as much light as possible. Along with that – the use of balconies. These balconies become the outdoor space, and in a multi-family project – especially for people under quarantine – we are seeing a resurgence in these spaces along with ground level units with larger patios.

DMR knows that these things contribute to tenants’ wellness with work at home situations becoming the standard. That five-foot by eight-foot piece of real estate outside, access to natural light and flexible spaces all a huge difference in a person’s life – and that’s what our mission is. Making your life better.

Public Infrastructure Procurement: A Whole New Ball Game?

Public Infrastructure Procurement: A Whole New Ball Game? 960 540 DMR Architects

By Charles H. Sarlo, Esq.

Recently enacted legislation has revived the P3 (public-private partnership) conversation in New Jersey, with DMR, a longtime supporter of the model, leading the way through a variety of advocacy efforts. In addition to the below blog post, DMR’s public advocacy has included other published media, webinar and conference involvement. For a complete roundup, please click here.

The below blog post originally appeared in the April 2019 New Jersey Association of Counties newsletter. 

New Jersey’s public contracts laws date back to 1917 at the time when Ty Cobb was the highest paid major league baseball player with an annual salary of $20,000.   While there has certainly been revisions to the law, as to how public projects are procured, the underlying basis over the last 100 years has remained the same, that being a low bid, competitive process.

In the last two months, we have a whole new ball game.  Mike Trout opted not to pursue free agency and signed one of the largest contract extensions, worth $430 million, and public entities in the State now have an alternate public infrastructure procurement path in the form of the Public Private Partnership (PPP) Law, which became effective on February 10, 2019 (L.2018, c 90, s1; N.J.S.S. 40A:11-52 et seq.).  The PPP Law provides for a design-build-finance-operate-maintain business model.

As with any new law, there is certainly unbridled excitement especially with the private sector eager to provide its innovative intellect and financial vigor to craft and implement proposed solutions to the public sectors’ backlog of unfunded infrastructure projects.  Is the PPP Law a game changer?  From a limited historical context, the State saw the commitment of just under one billion dollars of private investment for eleven, capital infrastructure projects in higher education, from 2010 through 2015, under the PPP provision within the 2009 Stimulus Act, which has sunset.  It is certainly anticipated that not every public project will be done under the PPP Law, as the anticipated Treasury regulations will require, in-part, proof that the proposed project is sufficiently complex in terms of the technical and / or financial requirements to effectively leverage private sector innovation and expertise.   However, once the public sector becomes more familiar with the regulatory process and the benefits of performing a project via a public-private-partnership, it is expected that this business model will certainly change the game, just as we recently saw with Mike Trout not only getting free agent type money, but being able to stay with the team that drafted him rather than opting for free agency.

Municipalities and P3: Diving Into the Innovative Economy

Municipalities and P3: Diving Into the Innovative Economy 960 540 DMR Architects

By Charles H. Sarlo, Esq.

Municipalities have the ability to be innovative and creative in addressing their infrastructure capital needs as a result of the newly enacted Public Private Partnership Law (PPP or P3), which became effective February 10 (L.2018, c.90, s.1; N.J.S.A. 40A:11 -52, et seq.). In order to ensure that a municipality’s economic decisions are financially prudent, the P3 law has built-in safeguards in the form of competitive solicitation, transparency in the form of public hearings, and checks and balances in the form of the State Treasurer making specific findings in connection with the approval of PPP projects.

The simplest definition of a Public Private Partnership is a contractual arrangement between a public entity and a private entity that allows for greater private sector participation in the delivery and financing of capital projects with the objective of shifting risk to the private sector. The P3 law allows for a design-build-finance-operate-maintain methodology to deliver capital projects and is an alternative project delivery method to the traditional procurement pursuant to the Local Public Contracts Law (LPCL), which is recognized as a design-bid-build approach.

Broad applicability

The P3’s statutory applicability in New Jersey is broad, as it allows the P3 project delivery model to be used for any building, local or county road, vertical structure, or facility constructed or acquired by a local government unit (defined to not only be municipalities, but also other public entities that are subject to the LPCL or Local Redevelopment and Housing Law) to operate local government functions, including any infrastructure or facility used or to be used by the public or in support of a public purpose or activity.

Today, the private sector’s innovative intellect and financial vigor can craft and implement proposed solutions to a municipality’s infrastructure needs. The theme of private sector innovative intellect is front and center in New Jersey’s P3 law, which allows the private sector to submit an unsolicited proposal in the form of a “project playbook” that includes certain statutory requirements.

Should the municipality elect to proceed, it must seek competitive proposals via a public procurement process that must also meet the minimum statutory requirements that that satisfy the same basic purpose and need of the unsolicited proposal. In the alternative, the municipality can issue a public procurement request-for-qualifications. Upon a determination of the qualified respondents, based, in part, on minimum standards to be promulgated by the State Treasurer, the municipality is required to issue a request for proposals.

Regardless of whether the unsolicited proposal or the solicited proposal pathway is applied, the municipality would rank the proposals received in order of preference based, in part, on minimum standards to be promulgated by the State Treasurer. Thereafter, the municipality is required to make specific determinations of the top-ranked proposals and hold a public hearing at which the specific findings must be made in order to find that the project is in the best interest of the public.

Subsequent to the public hearing, the municipality is required to submit a P3 application to the State Treasurer for review and approval. The statute requires the submission of specific items, including: full description of the proposed P3 agreement, a full description of the project, description of any agreement for the lease of a revenue-producing facility related to the project, the estimated costs and financial documentation for the project showing the underlying financial models and assumptions that determined the estimated costs, timetable for project completion, evidence of the public benefit in advancing the project as a P3, and the municipality’s findings during it’s proposal review and the public hearing.

For municipal projects, the State Treasurer, in consultation with the New Jersey Economic Development Authority (NJEDA) and the Department of Community Affairs (DCA), is statutorily charged with approving P3 applications. In order to validate that the proposed P3 project is in the best interest of the public, the State Treasurer must make specific findings for a P3 project approval.

If the P3 project is approved, the municipality can then enter into a P3 agreement with the private sector, which needs to include certain provisions, such as a completion date guarantee, liquidated damages, maximum rate of return to private entity, and a provision for the distribution of excess earnings to the local government or the private party for debt reduction, a project labor agreement, performance and payment bonds, prevailing wage, and the establishment of a construction account with a third-party financial institution to act as a collateral agent.

As with any newly enacted law, one can certainly anticipate litigation involving the P3 law in which a party seeks to clarify the intent of certain provisions, reconcile inconsistencies or challenge the law’s applicability.

Understandably, the initial inquiry by a public official will invariably be “Why?”

Why chose to undertake a capital infrastructure project on a path that appears to be complex, burdensome, and untested–while it may also be assumed to be more costly and potentially fraught with a litigation challenge–rather than the time-tested procurement under the Local Publics Contract Law. For each initial negative reaction, P3 advocates and P3 case studies can illustrate a positive counter. Generally, it has been proven that there is a role for the private sector to foster solutions for public sector challenges. A well-designed P3 is intended to be performance-based and outcome-focused with a risk-sharing approach where asset performance is optimized for the long term.

Qualifying considerations

Notwithstanding that some who have had firsthand experience undertaking a capital project under the LPCL would certainly express concerns that they experienced regarding project cost overruns, claims, and missed project completion dates, it should be recognized that the P3 law should not be considered a blanket replacement to capital project procurement under the LPCL, as not every project is appropriate for a P3 arrangement.

National P3 players will advise that a project cost of $50 million is the minimum project threshold for a P3 project. The New Jersey P3 law prohibits the bundling of projects (i.e., two or more projects considered as one for a P3 arrangement). However, there are many infrastructure needs of municipalities and other local government units with project costs less than $50 million.

Notwithstanding this industry threshold, it is fully expected and anticipated that the New Jersey local know-how of the private sector will adeptly be able propose P3 arrangements to the public sector pursuant to the P3 law, for many of a municipality’s capital infrastructure projects regardless of project size. The public sector should embrace the imagination of the private sector as related to its capital infrastructure needs and base its procurement decisions on sound economic analysis, which supports beneficial fiscal and social impacts as required by the P3 law.

The dawn of Public-Private-Partnerships in New Jersey is now. As may be applicable, it would certainly be prudent for public officials, who are charged with balancing the needs for public funds while developing, upgrading or replacing public infrastructure, to certainly consider the Public-Private-Partnership business model as an alternative procurement process, notwithstanding its embryonic stage.

This article originally appeared in New Jersey Municipalities.

Hackensack: A Redevelopment

Hackensack: A Redevelopment 960 540 DMR Architects

by Francis Reiner, PP, LLA

As densely populated as New Jersey is and as much development as we have seen over the last decade, there remain many once thriving communities struggling to regain relevance. Like many of these proud communities, Hackensack’s fate was sealed back in the 1970’s, with the advent of the malls and proliferation of land use policies that promoted isolated land uses where people would work in one location and live another. Previously esteemed communities like Hackensack slowly died from the inside. Left with little to no residential, high vacancy rates and low rents, these suburban downtown centers become desolate, dangerous areas with little opportunity for revitalization. Even today, there are many communities struggling to create a strategy to recover their vitality without having to compromise their vision and values.

It’s been a long road for Hackensack. Understanding all of the layers, all of the details, all of the pieces that have to be considered from the very start through every decision that is made every day to support the goals, objectives and vision for the City can be daunting. Most people would have given up on the thought that one day Hackensack would have another day in the sun and even with dozens of projects underway, there are still doubters. Even communities who can correctly articulate a strategy that takes into account the complexities of a changing demographic society looking to live and work in ways that no previous generations considered are lost for lack of the most essential element to revitalization: a plan.

But unlike many communities, Hackensack took this first step in redevelopment—which is the hardest to take. A plan may sound simple, and at the beginning it is: create a vision that represents the goals and objectives of the community. Then, identify public initiatives, plans, zoning, projects necessary to encourage the maximum amount of private investments and it quickly becomes more complicated. The plan also needs to maximize private investments in an area with numerous property owners, failing infrastructure, with poor circulation, that lacks parking and provides little to no entertainment without the use of condemnation within an existing and constrained 2% municipal budget. Each decision has to be weighed and measured to understand the financial implications while continuing to seek what is best for both its existing and future residents.

The key is to create a plan that promotes private redevelopment, increases tax revenue and enhances the community in a manner that meets the goals and objectives of the residents that is realistic for both the municipality and for the development community. Too many plans are written that are either not practically realistic or are not financially feasible. This key aspect is one of the most important differences from a plan that sits on a shelf, to a project that gets built. For municipalities, the professionals that represent you and their knowledge of development, costs and construction is a critical component to the creation of a plan.

For Hackensack, this meant creating zoning that encouraged land assemblages by creating a two tiered as of right zoning within the downtown. For small individual properties, a non-catalyst zone was created, which promoted smaller scaled redevelopment with appropriate parking ratios. However, for developers that assembled multiple properties that fronted on Main Street (Min. 200’) a catalyst zone was created, which permitted higher density development with lower parking ratios. For Hackensack’s revitalization this was a key component. Without the use of eminent domain and without any existing large land owners, creating zoning that promoted land assemblage allowed development to move forward. This along with designating a large enough area that allowed developers to find willing sellers without having such a large area that development could feel scattered and unconnected was a crucial first step in creating a vision for the downtown. The result of these strategies was that real estate brokers started to assemble multiple properties and package them for potential developers to consider.

In addition, the implementation of a streamlined submittal, review and approval process through the adoption of a Preliminary Review Committee Process, that gave developers a more certain understanding of the timeline and schedule. Architectural and Streetscape Design Standards were included in the Rehabilitation Plan and every Redevelopment Plan that has since been adopted. These standards represent the architectural design and scale that is consistent with the vision of the community and are the key to getting the look and design of a building during site plan approval.

The final piece was the City’s willingness to consider long term financial incentives to potential developers as a means to move development forward. This tool provides the City with significant increases in revenue that can be invested back into the City in the form of infrastructure improvements and new community facilities. For Hackensack that included the construction of a new public park, the renovation of a 140 year old abandoned building into a state of the art Performing Arts Center, the renovation and expansion of a Community and Recreation Facility, the design of new streetscape, the separation of combined stormwater and sewer system and the conversion Main and State Street back to two way. Fiscal responsibility included hiring an independent financial analyst to review each proposed PILOT.

Hackensack has attracted more than $500 million in private investment in less than 10 years, providing an example for the revitalization ambitions of other communities. Today, there are more that 750 new residential units under construction, with another 750 units that will start construction in 2018 and more than 2,000 additional units planned for in the next 5 to 7 years. The City recently opened a state-of-the-art Performing Arts Center and an award winning downtown park. The conversion of Main Street to two-way traffic is under construction and will include new streetscape and much needed and long overdue infrastructure improvements—all paid for by the revenues generated by redevelopment. The plan put in place only six short years ago is working.

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