ASSEMBLY, No. 3445

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED OCTOBER 25, 2010

 


 

Sponsored by:

Assemblyman  UPENDRA J. CHIVUKULA

District 17 (Middlesex and Somerset)

Assemblyman  ALBERT COUTINHO

District 29 (Essex and Union)

 

 

 

 

SYNOPSIS

     Establishes lease guaranty assistance program in NJEDA for use by certain eligible emerging technology and biotechnology companies.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act establishing a lease guaranty assistance program within the New Jersey Economic Development Authority and amending and supplementing P.L.1995, c.137 (C.34:1B-7.37 et seq.).

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 3 of P.L.1995, c.137 (C.34:1B-7.39) is amended to read as follows:

     3.    As used in [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.):

     "Authority" means the New Jersey Economic Development Authority established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4);

     "Biotechnology" means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge;

     "Biotechnology company" means a person, whose headquarters or base of operations is located in New Jersey, engaged in the research, development, production, or provision of biotechnology for the purpose of developing or providing products or processes for specific commercial or public purposes, including but not limited to, medical, pharmaceutical, nutritional, and other health-related purposes, agricultural purposes, and environmental purposes, or a person, whose headquarters or base of operations is located in New Jersey, engaged in providing services or products necessary for such research, development, production, or provision;

     "Cost" means the expenses incurred in connection with the operation of an emerging technology or biotechnology company in the State and shall include, but need not be limited to, the expenses of fixed assets, such as the construction, acquisition and development of real estate, materials, start-up, tenant fit-out, working capital, and any other expenses determined by the authority to be necessary to carry out the purposes of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.);

     "Emerging technology company" means a person, whose headquarters or base of operations is located in New Jersey, and who employs some combination of the following: highly educated or trained managers and workers, or both, employed in New Jersey who use sophisticated scientific research service or production equipment, processes or knowledge to discover, develop, test, transfer or manufacture a product or service;

     "Financial institution" means an individual or organization deemed eligible by the authority for participation in the program and shall include, but need not be limited to, State-chartered or federally-chartered banks, savings banks or savings and loan associations, banks organized under the laws of a foreign government, private individuals, insurance companies, landlords, finance companies and venture capitalists;

     "Fixed assets" means any real property, interests in real property, plant, equipment, and any other assets commonly accepted as fixed assets;

     "Program" means the "New Jersey Emerging Technology and Biotechnology Financial Assistance Program" established by the authority pursuant to section 4 of [this act] P.L.1995, c.137 (C.34:1B-7.40); and

     "Working capital" means those liquid capital assets other than fixed assets.

(cf: P.L.1995, c.137, s.3)

 

     2.    Section 5 of P.L.1995, c.137 (C.34:1B-7.41) is amended to read as follows:

     5.    a. To implement the program, the authority shall establish and maintain a special account to be known as the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund," hereinafter the "assistance fund," which shall be credited with: (1) an amount from the Economic Recovery Fund established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12) which the authority determines is necessary to effectively implement the program, within the limits of funding available from the Economic Recovery Fund; (2) any moneys that shall be received by the authority from the repayment of the moneys in the assistance fund used to provide financial assistance pursuant to this act and interest thereon; (3) other moneys of the authority, including but not limited to, any moneys available from other business assistance programs administered by the authority which it determines to deposit therein; and (4) any appropriation made by the Legislature to effectuate the purposes of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.).

     b.    The authority shall use the moneys in the assistance fund to: (1) provide or participate in the provision of financial assistance to emerging technology or biotechnology companies deemed approved pursuant to section 6 of [this act] P.L.1995, c.137 (C.34:1B-7.42), which assistance may include, but need not be limited to, loan guarantees and assistance in establishing lines of credit, real estate development assistance, the provision of lease guaranty payments or substitute tenants under the "Emerging Technology and Biotechnology Lease Guaranty Program" established pursuant to section 4 of P.L.    , c.    (C.       ) (pending before the Legislature as this bill), and technical advice on locating private and public sources of funding; and (2) defray the administrative expenses of the authority in carrying out the purposes and provisions of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.).

     c.     The maximum amount and term of a loan, line of credit or other form of financial assistance made pursuant to [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.) shall be determined by the authority.

     d.    Moneys in the assistance fund may be invested in such obligations as the authority may approve and net earnings received from the investment or deposit of moneys in the assistance fund by the authority shall be redeposited in the assistance fund for use for the purposes of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.).

     e.     The authority shall establish sufficient reserves and liquid reserves to provide a sufficient and actuarially sound basis for its pledges contained in any financial assistance agreement entered into pursuant to [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.).

     f.     The authority is authorized to disburse moneys in the assistance fund for purposes unrelated to [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.) if, for a period of at least three years, no moneys are disbursed from the assistance fund for the purposes set forth pursuant to [this act] P.L.1995, c.137.

(cf: P.L.1995, c.137, s.5)

 

     3.    Section 6 of P.L.1995, c.137 (C.34:1B-7.42) is amended to read as follows:

     6.    a. Applications for money from the assistance fund established under [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.) shall be submitted by emerging technology or biotechnology companies in a form and manner determined by the authority.  The authority shall approve or disapprove applications pursuant to the criteria developed pursuant to subsection c. of this section, and may employ any institution of higher education in this State in the approval process.

     b.    The authority shall enter into written agreements with emerging technology or biotechnology companies approved for financial assistance pursuant to [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.), and, as appropriate, with financial institutions concerning the type, amount and terms of the financial assistance provided.

     c.     The authority shall, in consultation with the [Department of Commerce and Economic Development, the] New Jersey Commission on Science and Technology and any institution of higher education in New Jersey, develop criteria for the approval or disapproval of applications submitted pursuant to subsection a. of this section.  Such criteria shall include, but need not be limited to, an evaluation of the emerging technology or biotechnology company's actual or potential scientific and technological viability, a determination that the emerging technology or biotechnology company's principal products or services are sufficiently innovative to provide a competitive advantage, a determination that the proposed financial assistance will result in significant growth in permanent, full-time employment in the State, a determination that the emerging technology or biotechnology company has been unable to secure financial assistance on affordable terms from conventional sources, a determination that the financial assistance provided pursuant to [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.) demonstrates the prospect of a high rate of return on investment, and the extent to which the applicant's proposed or expanded activities will enhance or diversify the State's capacity and competitiveness in the field of emerging technology or biotechnology.

     d.    The [Department of Commerce and Economic Development and the] authority may promote economic development in disadvantaged urban areas of the State, where emerging technology or biotechnology joint ventures have been or will be established.

(cf: P.L.1995, c.137, s.6)

 

     4.    (New section) a. There is hereby established an "Emerging Technology and Biotechnology Lease Guaranty Program" (“lease guaranty program”) within the authority.  The purpose of the lease guaranty program is for the authority to provide a guaranty of monies or a substitute tenant for the occupancy of real property within this State entered between emerging technology or biotechnology companies as lease tenants and property owners as landlords.

     b.    To implement the lease guaranty program, the authority shall provide to the landlord of property leased to an emerging technology or biotechnology company, having with such company a lease term of not less than five years:

     (1) from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund," established pursuant to section 5 of P.L.1995, c.137 (C.34:1B-7.41), a guaranty of moneys sufficient to pay up to three months rent cited under the terms and conditions of the lease where that company has defaulted on the lease; or

     (2) a substitute tenant emerging technology or biotechnology company that shall assume the obligations of the remainder of the term of the lease or that may extend the term of the lease for another five years.  Rent for any lease extension term shall not exceed the fair market value as determined by an independent commercial real estate appraiser licensed by the State Real Estate Appraiser Board established pursuant to section 3 of P.L.1991, c.68 (C.45:14F-3) and having at least ten year’s experience serving the State’s commercial real estate market.  The appraiser shall be jointly appointed by the landlord and substitute tenant prior to the extension of the lease and the appraiser’s determination shall be final and binding.  The authority shall establish a database listing the emerging technology or biotechnology companies eligible to substitute as tenants on any such lease.

     c.     Applications for participation in the lease guaranty program shall be submitted by emerging technology or biotechnology companies in a form and manner determined by the authority.  The applicant shall demonstrate to the authority that the applicant is an emerging technology or biotechnology company that: (1) has entered a lease with a lease term of not less than five years with a landlord for the occupancy of real property in this State; or (2) is able to substitute as a tenant on a lease that meets the eligibility requirements of the lease guaranty program.

     d.    Prior to making a payment from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund," under the lease guaranty program, the authority shall require proof from the landlord that the participating emerging technology or biotechnology company that has entered a lease with the landlord has defaulted on the lease and is not able to make lease payments.

     e.     The authority shall not provide an amount greater than $2 million annually from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund" to provide a guaranty of moneys under the lease guaranty program as authorized pursuant to paragraph (1) of subsection b. of this section.

 

     5.    Section 7 of P.L.1995, c.137 (C.34:1B-7.43) is amended to read as follows:

     7.    Not later than one year following the effective date of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.), and for each succeeding year in which a financial assistance agreement entered into under [this act] P.L.1995, c.137 is in effect, the authority shall prepare a report on the program.  The report shall include, but need not be limited to, a description of the demand for the program from emerging technology and biotechnology companies and financial institutions, the efforts made by the authority to promote the program, the total amount of financial assistance approved by the authority pursuant to the program and an assessment of the effectiveness of the program in meeting the goals of [this act] P.L.1995, c.137.  The authority shall submit its report to the Governor and the Legislature, including therein any recommendations for legislation to improve the effectiveness of the program.

(cf: P.L.1995, c.137, s.7)

 

     6.    Section 8 of P.L.1995, c.137 (C.34:1B-7.44) is amended to read as follows:

     8.    The authority shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), any rules and regulations necessary to effectuate the purposes of [this act] P.L.1995, c.137 (C.34:1B-7.37 et seq.).  In developing procedures and forms to be used in connection with the application for and approval of financial assistance pursuant to [this act] P.L.1995, c.137, the authority shall consider the special needs and problems of emerging technology and biotechnology companies in the State.

(cf: P.L.1995, c.137, s.8)

 

     7.  This act shall take effect on the 60th day after the date of enactment, but the New Jersey Economic Development Authority may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.

 

 

STATEMENT

 

     This bill establishes an "Emerging Technology and Biotechnology Lease Guaranty Program" (“lease guaranty program”) within the New Jersey Economic Development Authority ("authority").  The purpose of the lease guaranty program is for the authority to provide a guaranty of monies or a substitute tenant for the occupancy of real property within this State entered between emerging technology or biotechnology companies as lease tenants and property owners as landlords.

     To implement the lease guaranty program, the authority is to provide to the landlord of property leased to an emerging technology or biotechnology company, having with such company a lease term of not less than five years: 1) from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund," established pursuant to section 5 of P.L.1995, c.137 (C.34:1B-7.41), a guaranty of monies sufficient to pay up to three months rent cited under the terms and conditions of the lease where that company has defaulted on the lease; or 2) a substitute tenant emerging technology or biotechnology company that shall assume the obligations of the remainder of the term of the lease or that may extend the term of the lease for another five years.  Rent for any lease extension term shall not exceed fair market value as determined by an independent commercial real estate appraiser licensed in New Jersey and having at least ten year’s experience serving the State’s commercial real estate market.  The appraiser shall be jointly appointed by the landlord and substitute tenant prior to the extension of the lease and the appraiser’s determination shall be final and binding.  The authority shall establish a database listing the emerging technology or biotechnology companies eligible to substitute as tenants on any such lease.

     The bill provides that applications for participation in the lease guaranty program shall be submitted by emerging technology or biotechnology companies in a form and manner determined by the authority.  The applicant shall demonstrate to the authority that it is an emerging technology or biotechnology company that: 1) has entered a lease with a lease term of not less than five years with a landlord for the occupancy of real property in this State; or 2) is able to substitute as a tenant on a lease that meets the eligibility requirements of the lease guaranty program.

     Prior to making a payment from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund," the authority shall require proof from the landlord that the participating emerging technology or biotechnology company that has entered a lease with the landlord has defaulted on the lease and is not able to make lease payments.

     The bill restricts the authority from providing an amount greater than $2 million annually from the "New Jersey Emerging Technology and Biotechnology Financial Assistance Fund" to provide a guaranty of moneys under the lease guaranty program.

     Finally, the bill removes references to the Department of Commerce and Economic Development, as the department was abolished.