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Home The Atlantic-Hub Atlantic-Hub News Sandy’s economic impact softens

Sandy’s economic impact softens

For the most part, the state of New Jersey has “bounced back” from superstorm Sandy on an economic level, according to Dr. James Hughes and Marc Pfeiffer, of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.

However, there are exceptions which pertain to individual homeowners or unforeseen circumstances, the professors said.

Superstorm Sandy on Oct. 29, 2012 killed 43 people and devastated the tristate area with its hurricane force winds.

Hughes, the former dean of the Bloustein School, said recovery on an economic level is evident by looking at New Jersey private sector job numbers from before the storm hit in 2011 to 2016.

In 2011, the state was coming out of a recession. The state gained 25,800 private sector jobs.

In 2012, that number jumped to 44,900. In 2013, Hughes said probably due to the impact of Sandy, the number of new private sector jobs dipped to 37,600.

However, every year after that the state has gained private sector jobs. In 2014, the number increased to 45,800, in 2015, the number jumped to 57,500 and in 2016, the state gained 60,800 new private sector jobs.

Hughes said an interesting impact to look at is how many people have changed vacation plans due to the storm. He noted that a colleague at Rutgers vacationed for two summers in Cape Cod, Massachusetts, after Sandy.

Also, he said Sandy was a factor in hastening the decline of the Atlantic City casinos industry.

“The real impact of Sandy lies with individual property owners,” said Hughes, who is a nationally-recognized academic expert on demographics, housing and regional economics. “The homeowner may have owned a house for 30 years or so and it was wiped out [by Sandy] and the cost to rebuild was far beyond what the original structure was worth.”

He said that type of circumstance has a negative impact on municipalities and affects affluent and poorer areas in different ways.

The professors at Rutgers said other circumstances may include individual homeowners waiting for reimbursement funds from the Federal Emergency Management Agency (FEMA) and/or  delays in construction with the new height above sea level regulations.

Pfeiffer said there were even some criminal cases involving contractors, which delayed some homeowners from rebuilding.

The professors said homeowners who were not fiscally able to rebuild – leaving vacant parcels – impacted the economy in both a positive and negative way.

“When homes are lost, there is a loss of property values for the municipalities,” Pfeiffer said, adding that on the other hand the types of homes rebuilt on the vacant parcels were replaced with higher quality, elevated homes providing a different look for the area before Sandy.

Pfeiffer, who retired in 2012 from a 37-year career in New Jersey local government administration, said most municipalities that were devastated by Sandy pretty much have recovered whether they have already rebuilt or are in the process of rebuilding facilities, boardwalks and amenities.

By Memorial Day 2018, the last section of boardwalk in the City of Long Branch, Monmouth County, is expected to be rebuilt from Sandy. The storm damaged a mile of the city’s boards in 2012.

Robert Goodman, assistant director of the Office of Community and Economic Development in Long Branch, said there is a 550 foot long section of boardwalk that was not repaired to completion after Sandy.

“The primary reason for this was that this section of boardwalk had been designated in a previous developer’s agreement with Ironstate (the previous owners of Pier Village) for development of the last phase of Pier Village,” he said. “When Ironstate sold Pier Village and their future development rights to Kushner Companies in 2015, this put off final agreement on how this section would be developed.”

Goodman said the City of Long Branch has completed that agreement and Kushner (and construction partner Extell Development) will be repairing the last section of the boardwalk.

“As part of the overall development of Phase III for Pier Village, this section will feature improved roadways, pedestrian walks, shade areas as well as a carousel amusement ride.  Additionally, Pier Village III will include a hotel of 79 rooms and 289 condominium and town home units,” he said.

Sea Bright, also in Monmouth County, is in the midst of construction of its municipal buildings that were destroyed by floodwaters due to Sandy.

Officials said the Pavilion/Library construction is well underway with the structural steel in place. The completion date is on schedule for mid May 2018.

The design of the municipal complex, which will house all the public safety departments, including police and the fire departments, Office of Emergency Management and Emergency Medical Services, went out to bid last month.

With the anticipated contract award in November, construction would begin in December and be completed in May 2019.

The New Jersey Department of Environmental Protection is starting to also repair the existing sea wall and construction of a new sea wall to fill in the gap in downtown Sea Bright.

Pfeiffer said he is not surprised by looking at the overall progress the state has made since Sandy.

“[The rebuilding process] takes time,” he said. “In some cases, it has been positive for some municipalities with older buildings/infrastructure that wouldn’t have had an opportunity to rebuild due to the storm … there’s a downside and an upside.”

Those municipalities, Pfeiffer said, like Belmar, Seaside and Sea Bright are replacing infrastructure that will now last 20 to 30 years and beyond.

“The storm helped governments unintentionally that would have otherwise needed to find funds five to 10 years down the road anyway,” he said.

To date, since the storm more than 1,300 businesses and municipalities have been supported with more than $211 million in Community Development Block Grant — Disaster Recovery (CDBG-DR) funds provided by the Department of Housing and Urban Development, according to Virginia Pellerin, program manager of  communications for the New Jersey Economic Development Authority (NJDEA).

Since inception, the Stronger New Jersey (NJ) business programs, which are administered through the NJDEA, have created or retained a total of 6,134 jobs. The Stronger NJ Business Loan Program, which provides loans of up to $5 million to storm-impacted businesses, approved approximately $87 million in loans for 120 businesses as of the second quarter of 2017.

An additional $127 million has been approved for 10 NJ Energy Resilience Bank projects on a preliminary basis with an additional $73 million of allocated funding, to ensure continuity of essential resources, such as hospitals and water treatment facilities, during future emergencies, Pellerin said.

In addition, through the Retail Fuel Station program, which was funded by the Federal Emergency Management Agency’s Hazard Mitigation Grant Program, 117 gas stations have been supported by $3.9 million in grants to provide them with a reliable power source in the event of future outages.

Lisa Ryan, director of Strategic Communications in the Sandy Recovery Division of the Department of Community Affairs (DCA), said more than a quarter of New Jersey’s CDBG Disaster Recovery funds have been allocated to the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program, which is the state’s flagship housing recovery program.

RREM helps eligible homeowners whose primary residences were damaged by Sandy to complete the necessary work to make their homes livable and compliant with flood plain, environmental, and other federal, state and local requirements.

The program provides grants of up to $150,000 for eligible activities necessary to rehabilitate or reconstruct their storm-damaged homes and mitigate them, through elevation or some other means, against future storms.

“More than $1 billion in RREM grants have been awarded to approximately 7,600 homeowners participating in the program,” Ryan said. “To date, nearly $900 million — or about 90 percent — of the awarded grants have been disbursed via checks to homeowners.”

Currently, Ryan said 5,546 homeowners in RREM have completed construction, and another roughly 700 homeowners have returned home as they finish construction.

“Nearly all the remaining homeowners have started construction, with many of them anticipated to finish rebuilding by the end of the year,” she said.

Also, the state’s largest affordable rental housing recovery initiative is the Fund for Restoration of Multifamily Housing (FRM) Program, which provides for-profit and non-profit housing developers an opportunity to secure zero-interest and low-interest loans to finance the development of affordable housing in the nine counties most impacted by the storm (Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean and Union).

“To date, the state has funded approximately 5,150 housing units for households of low-to-moderate-income through the FRM program,” Ryan said. “The state received federal approval in June 2017 to provide a fourth round of FRM funding, which is anticipated to create an additional 255 to 350 affordable housing units in counties hit hard by Sandy.”

To assist Sandy-impacted homeowners who face frequent flooding, the state had administered the Sandy Blue Acres Buyout program.

The program was expanded in the second quarter through the state’s reallocation of $75 million in CDBG-DR funds to help more New Jersey families in flood zones move out of harm’s way and to enhance community flood resiliency.

The total CDBG-DR contribution of $174.5 million to the buyout program builds on other funding that has been committed for the program, which in total approaches $400 million.

With respect to CDBG-DR funds, buyouts are underway in six municipalities — Ocean Township, Old Bridge, Linden, New Milford, Rahway, and South River — with 136 offers accepted, 90 properties purchased, and 37 homes demolished as of June 30, 2017.

Ryan said all of the programs are funded with federal Community Development Block Grant Disaster Recovery (CDBG-DR) monies that were allocated to the State of New Jersey to help with Sandy recovery.