ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT COMMITTEE

 

STATEMENT TO

 

ASSEMBLY, No. 3353

 

STATE OF NEW JERSEY

 

DATED:  NOVEMBER 8, 2010

 

      The Assembly Commerce and Economic Development Committee reports favorably Assembly Bill No. 3353.

      This bill establishes the "New Jersey Closing Fund" ("fund") under the jurisdiction of the State Treasurer and administered by the New Jersey Economic Development Authority ("authority").  The purpose of the fund is to stimulate economic activity by encouraging and promoting the retention and expansion of existing business and industry within the State, and by creating and attracting new business and industry to the State.  To implement that purpose, and to the extent funding is available, the bill authorizes the State Treasurer to grant an award under the fund to projects that will significantly benefit the State and that require additional resources as an inducement to locate or remain in the State.

      The bill requires the authority to determine the eligibility of each project seeking an award from the fund based on the authority’s finding that the project meet the following criteria: 1) the project comprises a designated industry facility as defined in the bill; 2) the project will have a payback period of at least five years; 3) the receipt of an award from the fund will be a material factor in the applicant’s decision to proceed with the project; 4) together with any other financial incentives the project receives from the State, the project will yield a measurable net positive financial benefit to both the State and the municipality in which the project is to be located; and 5) the project will stimulate economic activity within the State through the creation of new full-time jobs, the retention of existing full-time jobs, or a significant capital investment in the project.

      The authority is to determine eligibility of each project consistent with the above criteria, but may, in consultation with the State Treasurer, waive these criteria based on extraordinary circumstances if the project would significantly benefit the economy of the State.  The authority is to recommend approval or disapproval of a project for an award from the fund, to the State Treasurer.  In recommending a project for an award of funds, the bill requires the authority to include proposed performance conditions that the project shall meet to obtain the award.  In reviewing the recommendations of the authority, the State Treasurer may accept the recommendations of the authority.  Upon approval by the authority, the State Treasurer shall prepare a contract for the award of funds that shall include proposed performance conditions that the project shall meet to obtain the funds.

      An application for an award from the fund shall include: 1) a schedule of short-term and long-term employment projections resulting from the project’s location in the State; 2) the terms of any lease agreements or details of the purchase or building of a qualified facility in connection with the project; 3) an estimate of the projected State tax revenues resulting from the project; 4) the amount of capital investment in the project; 5) a description of the type of contribution the project can make to the long-term growth of the State’s economy; 6) a written commitment by the applicant to operate the project for at least five years after receipt of the award; and 7) any other necessary and relevant information as determined by the authority.

      Upon approval by the State Treasurer, the bill requires the authority and the applicant to enter into a contract that specifies: 1) the total amount of funds approved to be awarded from the fund; 2) the performance conditions, if any, that shall be met to receive payment of the award; 3) the schedule of payments from the fund; 4) that the funds received may only be used for the purposes set forth in the bill; 5) that the project must operate for at least five years after receipt of the award; 6) sanctions for failure to meet performance conditions; 7) that the payments from the fund are contingent upon sufficient legislative appropriations; and 8) any other provision that the State Treasurer finds necessary to ensure the proper use of the funds.

      The bill appropriates from the General Fund to the authority such sums as may be necessary to fund the New Jersey Closing Fund, including an amount equal to five percent of those incremental State revenues under the State Economic Redevelopment and Growth Grant program established pursuant to section 4 of P.L.2009, c.90 (C.52:27D-489d).