A2851

An Act concerning certain urban enterprise zones, amending P.L.1983, c.303 and P.L.2001, c.347, and supplementing Title 52 of the Revised Statutes.

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

1. Section 7 of P.L.1983, c.303 (C.52:27H-66) is amended to read as follows:

7. The authority shall designate enterprise zones from among those areas of qualifying municipalities determined to be eligible pursuant to P.L.1983, [s.] c.303 (C.52:27H-60 et seq.). No more than 32 enterprise zones shall be in effect at any one time. No more than one enterprise zone shall be designated in any one municipality. [Except as otherwise provided by section 11 of P.L.2001, c.347 (C.52:27H-66.6), any designation granted shall be for a period of 20 years, beginning with the year in which a zone is eligible for an exemption to the extent of 50% of the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.), and shall not be renewed at the end of that period.] In designating enterprise zones the authority shall seek to avoid excessive geographic concentration of zones in any particular region of the State. At least six of the 10 additional enterprise zones authorized pursuant to section 3 of P.L.1993, c.367 shall be located in counties in which enterprise zones have not previously been designated and shall be designated within 90 days of the date of the submittal of an application and zone development plan. The authority shall accept applications within 90 days of the effective date of P.L.1993, c.367. Notwithstanding the provisions of P.L.1983, c.303 (C.52:27H-60 et seq.) to the contrary, the six additional enterprise zones to be designated by the authority pursuant to the criteria for priority consideration in this section shall be entitled to an exemption to the extent of [50%] 50 percent of the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.). The following criteria shall be utilized in according priority consideration for designation of these zones by the authority:

a. One zone shall be located in a county of the second class with a population greater than 595,000 and less than 675,000 according to the latest federal decennial census and shall be located in the qualifying municipality in that county with the highest annual average number of unemployed persons and the highest average annual unemployment rate for the 1992 calendar year according to the estimate by the State Department of Labor and Workforce Development;

b. Two zones shall be located in a county of the second class with a population greater than 445,000 and less than 455,000 according to the latest federal decennial census, one of which shall be located in the qualifying municipality in that county with the highest annual average number of unemployed persons and the highest average annual unemployment rate for the 1992 calendar year according to the estimate by the State Department of Labor and Workforce Development, and one of which shall be located in the qualifying municipality in that county with the second highest annual average number of unemployed persons and the second highest average annual unemployment rate for the 1992 calendar year according to the estimate by the State Department of Labor and Workforce Development;

c. One zone shall be located in a county of the third class with a population greater than 84,000 and less than 92,000 according to the latest federal decennial census and shall be located in the qualifying municipality in that county with the highest annual average number of unemployed persons and the highest average annual unemployment rate for the 1992 calendar year according to the estimate by the State Department of Labor and Workforce Development;

d. One zone shall be located within two noncontiguous qualifying municipalities but comprised of not more than two noncontiguous areas each having a continuous border, if:

(1) both municipalities are located in the same county which shall be a county of the fifth class with a population greater than 500,000 and less than 555,000 according to the latest federal decennial census;

(2) the two municipalities submit a joint application and zone development plan; and

(3) each of the municipalities has a population greater than 16,000 and less than 30,000 and a population density of more than 5,000 persons per square mile, according to the latest federal decennial census; and

e. One zone shall be located within a municipality having a population greater than 38,000 and less than 46,000 according to the latest federal decennial census if the municipality is located within a county of the fifth class with a population greater than 340,000 and less than 440,000 according to the latest federal decennial census.

(cf: P.L.2004, c.75, s.2)

2. Section 11 of P.L.2001, c.347 (C.52:27H-66.6) is amended to read as follows:

11. a. Notwithstanding the provisions of any law, rule, regulation, or order to the contrary, the designation of an enterprise zone by the authority pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.), which is located in a municipality in which the annual average of unemployed persons is equal to or greater than 2,000, or the municipal average annual unemployment rate exceeds the State average annual unemployment rate, or an enterprise zone which is located in a municipality contiguous to a municipality in which an enterprise zone is designated pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.) and in which the annual average of unemployed persons is equal to or greater than 2,000 or the municipal average annual unemployment rate exceeds the State average annual unemployment rate, shall, following the expiration of the third five-year period during which the State shall have collected reduced rate revenues within the zone as provided in subsection c. of section 21 of P.L.1983, c.303 (C.52:27H-80), be extended by the authority [, on a one-time basis,] for a period of 16 years, within 90 days after the effective date of P.L.2001, c.347 (C.52:27H-66.2 et al.), or within 90 days after the expiration of that third five-year period, whichever is later.

b. During the 90-day period provided for in subsection a. of this section, the authority shall notify all qualified businesses in the enterprise zone that the benefits authorized by sections 16 through 20 of P.L.1983, c.303 (C.52:27H-75 through C.52:27H-79) shall be extended to qualified businesses in the enterprise zone commencing with the designation of the extended enterprise zone and continuing as long as a zone retains its designation as an extended enterprise zone.

c. Notwithstanding [any other] the provisions of any law, rule, or regulation to the contrary, 90 days after the expiration of the period provided for in subsection c. of section 21 of P.L.1983, c.303 (C.52:27H-80), except as provided in subsection b. of section 6 of P.L.1996, c.124 (C.13:1E-116.6), and after first depositing 10 percent of the gross amount of all revenues received from the taxation of retail sales made by certified vendors from business locations in an extended enterprise zone designated pursuant to subsection a. of this section, to which this exemption shall apply, into the account created in the name of the authority in the enterprise zone assistance fund established pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88), the remaining 90 percent shall be deposited immediately upon collection by the Department of the Treasury, as follows:

(1) In the first five-year period, during which the State shall have collected reduced rate revenues within the extended enterprise zone, [all such] those revenues shall be deposited in the enterprise zone assistance fund [created pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88)];

(2) In the second five-year period during which the State shall have collected reduced rate revenues within the extended enterprise zone, 66 [2/3%] and 2/3 percent of [all] those revenues shall be deposited in the enterprise zone assistance fund, and 33 [1/3%] and 1/3 percent shall be deposited in the General Fund;

(3) In the third five-year period during which the State shall have collected reduced rate revenues within the extended enterprise zone, 33 [1/3%] and 1/3 percent of [all] those revenues shall be deposited in the enterprise zone assistance fund, and 66 [2/3%] and 2/3 percent shall be deposited in the General Fund;

(4) In the [final] sixteenth year during which the State shall have collected reduced rate revenues within the extended enterprise zone, but not to exceed the life of the enterprise zone, [all] those revenues shall be deposited in the General Fund.

The revenues required to be deposited in the enterprise zone assistance fund [under] pursuant to this section shall be used for the purposes of [that] the enterprise zone assistance fund and for the uses prescribed in section 29 of P.L.1983, c.303 (C.52:27H-88), subject to annual appropriations being made for those purposes and uses.

d. The designation as an extended enterprise zone pursuant to this section shall terminate if the authority determines that the municipality in which the zone is located fails to meet the criteria of subsection a. of this section for three consecutive years. Any enterprise zone which loses its designation as an extended enterprise zone pursuant to this subsection shall be eligible to re-apply to the authority for designation as an extended enterprise zone pursuant to the provisions of P.L.1983, c.303 (C.52:27H-60 et seq.). If the authority approves its application, an urban enterprise zone designation may be extended to the applicant in accordance with the schedules set forth in P.L.1983, c.303 (C.52:27H-60 et seq.), beginning at the point where the enterprise zone was located on [such] those schedules on the effective date of P.L.2001, c.347 (C.52:27H-66.2 et al.).

(cf: P.L.2001, c.347, s.11)

3. (New section) a. Notwithstanding the provisions of any law, rule, or regulation to the contrary, the duration of the first five enterprise zones that were designated pursuant to P.L.1983, c.303 (C.52:27H-60 et seq.), are hereby extended for a period of two additional years beyond the date the enterprise zones were scheduled to expire prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill). This extension shall be in addition to the extension provided for in section 11 of P.L.2001, c.347 (C.52:27H-66.6).

b. The authority shall notify all qualified businesses in the enterprise zones extended pursuant to subsection a. of this section that the benefits authorized by sections 16 through 20 of P.L.1983, c.303 (C.52:27H-75 through C.52:27H-79) and by section 23 of P.L.2004, c.65 (C.52:27H-87.1)have been extended to qualified businesses, and the exemption provided by section 21 of P.L.1983, c.303 (C.52:27H-80) will remain in effect for retail sales made by a certified seller from a place of business,in the enterprise zones for a period of two additional years.

c. Notwithstanding the provisions of any law, rule, or regulation to the contrary, within 90 days after the date each enterprise zone was scheduled to expire prior to the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), and after first depositing 10 percent of the gross amount of all revenues received from the taxation of retail sales made by qualified businesses from business locations in each enterprise zone, to which this exemption shall apply, into the account created in the name of the authority in the enterprise zone assistance fund established pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88), the remaining 90 percent shall be deposited immediately in the General Fund upon collection by the Department of the Treasury.

d. The revenues required to be deposited in the enterprise zone assistance fund pursuant to subsection c. of this section shall be used for the purposes of the assistance fund and for the uses prescribed in section 29 of P.L.1983, c.303 (C.52:27H-88), subject to annual appropriations being made for those purposes and uses.

4. Section 29 of P.L.1983, c.303 (C.52:27H-88) is amended to read as follows:

29. a. There is created an enterprise zone assistance fund to be held by the State Treasurer, which shall be the repository for all moneys required to be deposited therein under section 21 of P.L.1983, c.303 (C.52:27H-80) or moneys appropriated annually to the fund. All moneys deposited in the fund shall be held and disbursed in the amounts necessary to fulfill the purposes of this section and subject to the requirements hereinafter prescribed. The State Treasurer may invest and reinvest any moneys in the fund, or any portion thereof, in legal obligations of the United States or of the State or of any political subdivision thereof. Any income from, interest on, or increment to moneys so invested or reinvested shall be included in the fund.

The State Treasurer shall maintain separate accounts for each enterprise zone designated under P.L.1983, c.303 (C.52:27H-60 et [al.] seq.), and one in the authority's name for the administration of the Urban Enterprise Zone program. The State Treasurer shall credit to each account an amount of the moneys deposited in the fund equal to the amount of revenues collected from the taxation of retail sales made in the zone and appropriated to the enterprise zone assistance fund, or that amount of moneys appropriated to the fund and required to be credited to the enterprise zone account of the qualifying municipality pursuant to section 21 of P.L.1983, c.303 (C.52:27H-80).

The State Treasurer shall promulgate [the] rules and regulations necessary to govern the administration of the fund for the purposes of this section, which shall include, but not be limited to, regulations requiring the establishment of separate bank accounts for funds credited to the enterprise zone account of each municipality from the enterprise zone assistance fund, commonly known as "first generation funds," and funds generated from the repayments of loans to individuals and businesses from the enterprise zone account of each municipality and the proceeds from the sale of properties and equipment acquired through the enterprise zone program, commonly known as "second generation funds," and the review, compilation, and monitoring of second generation fund quarterly reports submitted by each enterprise zone.

Any individual, including an individual who is not directly employed by a municipality, with the authority to administer, allocate, or approve the use of zone assistance funds is subject to the "Local Government Ethics Law," P.L.1991, c.29 (C.40A:9-22.1 et seq.), unless the individual is a State employee or a special State officer.

b. The enterprise zone assistance fund shall be used for the purpose of assisting qualifying municipalities in which enterprise zones are designated in undertaking [public improvements,] economic development projects [and in upgrading eligible municipal services] in designated enterprise zones.

c. The governing body of a qualifying municipality in which an enterprise zone is designated and the zone development corporation created or designated by the municipality for that enterprise zone may, by resolution jointly adopted after public hearing, propose to undertake [a] an economic development project [for the public improvement of the enterprise zone or to increase eligible municipal services] in the enterprise zone, and to fund that project [or increase in eligible municipal services] from moneys deposited in the enterprise zone assistance fund and credited to the account maintained by the State Treasurer for the enterprise zone.

The proposal so adopted shall set forth a plan for the project [or for the increase in eligible municipal services] and shall include:

(1) A description of the proposed project [or of the municipal services to be increased];

(2) An estimate of the total project costs [, or of the total costs of increasing the municipal services], and an estimate of the amounts of funding necessary annually from the enterprise zone account;

(3) A statement of any other revenue sources to be used to finance the project [or to fund the increase in eligible municipal services];

(4) A statement of the time necessary to complete the project [, or of the time during which the increased municipal services are to be maintained];

(5) A statement of the manner in which the proposed project [or increase in municipal services] furthers the municipality's policy and intentions for addressing [the] economic [and social conditions existing] development in the [area of the] enterprise zone as set forth in the zone development plan approved by the authority; and

(6) A description of the financial and programmatic controls and reporting mechanisms to be used to guarantee that the funds will be spent in accordance with the plan and that the project [or increased municipal service] will accomplish its purpose.

As used in this section, "project" means an activity funded by the zone assistance fund through the qualified municipality and implemented by the zone development corporation [, including the purchasing, leasing, condemning, or otherwise acquiring of land or other property, or an interest therein, in the enterprise zone or as necessary for a right-of-way or other easement to or from the enterprise zone; the relocating and moving of persons or businesses displaced by the acquisition of land or property; the rehabilitation and redevelopment of land or property, including demolition, clearance, removal, relocation, renovation, alteration, construction, reconstruction, installation or repair of land or a building, street, highway, alley, utility, service or other structure or improvement] which will lead to the creation of new jobs and increased economic activity within the zone [; the purchase and installation of closed circuit television surveillance systems or other related equipment and those expenses associated with homeland security and domestic preparedness; the acquisition, construction, reconstruction, rehabilitation, or installation of public facilities and improvements, except buildings and facilities for the general conduct of government and schools;] , such as: the establishment of revolving loan [or grant] programs for qualified businesses in the zone to encourage private investment and job creation, [matching grant programs for the establishment or operation of pedestrian malls, special improvement districts and tax increment districts, or other appropriate entity;] and marketing, advertising, and special event activities that will lead to increased economic activity or encourage private investment and job creation in the zone, but not including the expenditures therefor which are required to be reported pursuant to "The New Jersey Campaign Contributions and Expenditures Reporting Act," P.L.1973, c.83 (C.19:44A-1 et [al.] seq.) and the costs associated therewith including the costs of [an administrative appraisal,] economic [and environmental] analyses [, environmental remediation, engineering, planning, design, architectural, surveying or other professional or managerial services].

[As used in this section, "eligible municipal services" means the hiring of additional policemen or firemen assigned duties in the enterprise zone, or the purchasing or leasing of additional police or fire vehicles, equipment or apparatus to be used for the provision of augmented or upgraded public safety services in the enterprise zone and its immediate vicinities.]

d. Upon adoption by the governing body of the qualifying municipality and by the zone development corporation, the proposal shall be sent to the authority for its evaluation and approval. The authority shall approve the proposal if it shall find [:

(1) In the case of a project,] that the proposed project furthers the policy and intentions of the zone development plan approved by the authority, and that the estimated annual payments for the project from the enterprise zone account to which the proposal pertains are not likely to result in a deficit in that account [;

(2) In the case of an increase in eligible municipal services, that the proposal furthers the policy and intentions of the zone development plan approved by the authority; that the qualifying municipality has furnished satisfactory assurances that the additional policemen or firemen to be hired, or the additional vehicles, equipment or apparatus to be purchased or leased, shall be used to augment or upgrade public safety in the enterprise zone, and shall not be used in other areas of the municipality; that the qualifying municipality shall annually appropriate for the increased eligible municipal services an amount equal to 20% of the amount of annual payments for the eligible municipal services from the enterprise zone account and shall not request for the increased eligible municipal services an amount equal to more than 35% of the amount of annual payments into the enterprise zone account, unless the municipality and the authority have entered into an agreement or agreements to the contrary prior to July 1, 1992; and that the estimated annual payments for the eligible municipal services from the enterprise zone account to which the proposal pertains are not likely to result in a deficit in that account].

e. If the authority shall approve the proposal, it shall annually, upon its receipt of a written statement from the governing body of the qualifying municipality and the zone development corporation, certify to the State Treasurer the amount to be paid in that year from the enterprise zone account in the enterprise zone assistance fund with respect to each approved project [or increase in eligible municipal services approved]. The authority may at any time revoke its approval of a project [or an increase in eligible municipal services] if it finds that the annual payments made from the enterprise zone assistance fund are not being used as required by this section.

f. Upon certification by the authority of the annual amount to be paid to a qualifying zone with respect to any project [or increase in eligible municipal services], the State Treasurer shall pay in each year to the qualifying municipality from the amounts deposited in the enterprise zone assistance fund the amount so certified, within the limits of the amounts credited to the enterprise zone account of the qualifying municipality.

g. An amount not to exceed one-third of the amount deposited in the account created in the name of the authority in the enterprise zone assistance fund shall be used by the authority for the coordination and administration of the program throughout the State, including but not limited to costs for personnel, operating expenses, and marketing. The balance of the remaining amount shall be distributed to qualifying municipalities in proportion to each municipality's contribution to the enterprise zone assistance fund for the coordination and administration of the program within the municipality, including but not limited to costs for personnel, operating expenses, and marketing.

(cf: P.L.2009, c.25, s.1)

5. (New section) The Commissioner of Community Affairs, in consultation with other departments and agencies as the commissioner deems appropriate, shall undertake a review and analysis of the Urban Enterprise Zone program created pursuant to the “New Jersey Urban Enterprise Zones Act,” P.L.1983, c.303 (C.52:27H-60 et seq.), and shall report the commissioner’s findings and recommendations to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature no later than six months from the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill). The report shall assess, without limitation, whether, as the enterprise zones created by P.L.1983, c.303 (C.52:27H-60 et seq.) expire, an alternative, location-based program to assist fiscally distressed municipalities is appropriate, and, if so, the commissioner shall recommend the parameters of such a program that would provide a sufficient return on State investment.

6. This act shall take effect immediately.

STATEMENT

This bill extends the duration of the first five designated urban enterprise zones (UEZ) for two additional years, specifies the permissible use of UEZ funds received from the taxation of certain retail sales made by qualified businesses in those UEZs, and requires the Commissioner of Community Affairs to review and issue a report on the UEZ program.

Two-Year Extension of UEZ Designation. The bill extends the UEZ designation for the former UEZs located in the cities of Bridgeton, Camden, Newark, Plainfield, and Trenton for two additional years as of the effective date of the bill. The UEZs located in these cities were the first five UEZs to receive a UEZ designation from the New Jersey Urban Enterprise Zone Authority in 1983, and they expired on December 31, 2016.

During the two-year extension, the UEZs in those cities are to continue their designation and participate in the UEZ program to the economic benefit of the communities in which the UEZs are located. Qualified businesses that participate in the UEZ program are to be eligible for certain UEZ incentives and benefits currently available through the program, including the corporation business tax employees tax credit and the investment tax credit, the sales and use tax exemption for qualified business purchases, and the sales and use tax exemption for energy and utility services, and, if certified, are to be permitted to collect the sales and use tax on retail sales made from a place of business located in the UEZ at one-half the Statewide sales and use tax rate.

Permissible Use of UEZ Funds. The bill establishes a statutory dedication of revenues received from the taxation of retail sales made by qualified businesses from business locations in the UEZs in Bridgeton, Camden, Newark, Plainfield, and Trenton during the two-year extension. The bill provides that, after first depositing 10 percent of the gross amount of all revenues received from the reduced taxation of retail sales made by qualified businesses from business locations in those UEZs into the account created in the name of the UEZ Authority in the Enterprise Zone Assistance Fund (fund), the remaining 90 percent of revenue received from those retail sales is to be deposited to the State General Fund.

In addition, the bill amends current law to limit the use of money deposited to the fund. The bill provides that money deposited to the fund from tax revenues collected by qualified businesses in UEZs in Bridgeton, Camden, Newark, Plainfield, and Trenton as well as UEZs in other locations throughout the State is to be used to assist qualifying municipalities in undertaking economic development projects.

Currently, money deposited to the fund can be used for certain other purposes. The law currently permits money deposited to the fund to be used to assist qualifying municipalities in which UEZs are located in undertaking improvements, economic development projects, and in upgrading eligible municipal services in designated UEZs.

Commissioner’s Report on UEZ Program. The bill directs the Commissioner of Community Affairs to review and analyze the UEZ program and to issue a report on the commissioner’s findings and recommendations to the Governor and the Legislature no later than six months from the effective date of the bill. The report is to assess whether, as UEZs expire, an alternative, location-based program to assist fiscally distressed municipalities is appropriate, and, if so, the commissioner is to recommend the parameters of a program that provides a sufficient return on State investment.

Effective Date. The bill is scheduled to take effect immediately upon enactment.