ASSEMBLY, No. 2803
STATE OF NEW JERSEY
INTRODUCED MARCH 20, 1997
By Assemblyman DiGAETANO
An Act concerning the financing of the development of economic growth areas and supplementing Title 34 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Economic Growth Act."
2. The Legislature finds and declares that:
a. The development and expansion of retail, commercial and entertainment establishments can generate tangible long-term benefits for the State, its local political subdivisions and its citizens.
b. These benefits include increases in State sales tax and local property tax revenues and new employment opportunities, as well as the overall enhancement of life in New Jersey.
c. In order to develop these areas in a beneficial manner, it is in the public interest to provide the means to finance certain infrastructure costs of development and redevelopment and other costs, in order to open new avenues for private investment, create jobs, stimulate commercial, recreational, cultural, entertainment, civic and educational enterprises, and create favorable conditions for increases in economic activity, property values and employment opportunities.
d. The potential for substantial gains in new tax revenues, jobs and economic activity, and the potential enhancement to the quality of life in the State and for its citizens, justifies the use of State assistance to encourage private investment and to promote development and redevelopment projects that would not otherwise occur without such State assistance.
3. As used in this act:
"Authority" means the New Jersey Economic Development Authority created pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4).
"Bonds" means the bonds, notes, or other obligations issued by the authority, a developer or any other entity pursuant to this act to finance a development, project or project costs authorized by this act.
"Commissioner" means the Commissioner of Commerce and Economic Development.
"Department" means the Department of Commerce and Economic Development.
"Developer" or "redeveloper" means any person or entity establishing or creating a development pursuant to this act.
"Development" or “redevelopment” means a new retail, commercial or entertainment business, or similar enterprise, or complex, or the improvements or expansion of an existing development, or portion thereof, the activities of which generate or are anticipated to generate sales tax revenues or other revenues, within an economic growth area.
"Economic development plan" or "development plan" means a proposal or plan, submitted by a developer to the State Treasurer pursuant to section 5 of this act, which describes the potential benefits including, but not limited to, new economic activity, tax revenues and job creation, that are expected to flow from a proposed development.
"Economic growth area" or "growth area" means a designated geographic area or a new commercial, retail or entertainment business, or similar enterprise, or complex, or expansion thereof, in this State, generating or anticipated to generate sales tax revenues, pursuant to the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.), or other revenues, that would not have been realized without State assistance to a development or project, as determined by the State Treasurer pursuant to this act.
"Economic Growth Fund" or "growth fund" means a special fund established in the State's General Fund pursuant to section 4 of this act.
"Project" means the purchasing, leasing, condemning or otherwise acquiring of land or other property, or an interest therein, in a growth area or, as necessary or convenient for the acquisition of any right-of-way or other easement to or from a growth area; the moving and relocation of persons or businesses displaced by the acquisition of land or property; the acquisition, construction, reconstruction or rehabilitation of land or property and improvements thereon, or the financing thereof, including demolition, clearance, removal, relocation, renovation, alteration, construction, reconstruction, fill or environmental enhancement, alteration or repair of any land, building, street, highway, utility, mass transit facility, service or other structure, infrastructure or improvement in a growth area or as necessary to effectuate a development plan for a development within a growth area, including infrastructure improvements outside a growth area which the State Treasurer determines are integral to the effectuation of a development, the acquisition, construction, reconstruction, rehabilitation or installation of public facilities and improvements of nonprofit corporations or other suitable public or private persons, firms, corporations or associations, including educational, cultural, civic and recreational facilities including, but not limited to, convention centers, arenas and public meeting facilities, or the financing thereof; and all costs associated with any of the foregoing, including the payment of principal of and interest on bonds issued by a developer or any other entity, and the costs of administrative appraisals, legal, financial, economic and environmental analysis, engineering or cleanup, planning, design, architectural, surveying or other professional and technical services necessary to effectuate the purposes of this act.
"Project cost" means the cost of a project, within a growth area or located in adjacent locations, as determined by the State Treasurer, or the cost of a development, and of any and all property, rights, assessments, privileges, agreements and franchises deemed by the State Treasurer to be necessary or useful or convenient therefor or in connection therewith, the cost of issuance of bonds, including interest, engineering and inspection costs, legal expenses, costs of financial and other professional estimates and advice, organization, administrative, operating and other expenses of the State Treasurer or developer prior to and during the planning and implementation of a development, or project, including such provisions as the State Treasurer may determine for the payment, or security for payment, of principal of bonds during or after the implementation of any development, or project or project costs.
4. a. The State Treasurer shall establish and maintain a special fund in the State's General Fund to be known as the "Economic Growth Fund" into which shall be deposited: (1) such moneys as shall be paid to the growth fund from sales tax revenues pursuant to section 8 of this act; (2) such other tax revenues and other sums as shall be appropriated by the State for the purposes of the growth fund; (3) such moneys as shall be paid to the growth fund from a developer, redeveloper or other similar party; and (4) such moneys as shall be paid to the growth fund from any other governmental entity or from any other source.
b. If the State Treasurer determines that the criteria of sections 6 and 7 of this act have been met, the Treasurer shall use the fund for the purposes set forth in this act including, but not limited to: (1) paying for projects and project costs; (2) paying grants, and paying the principal of and interest on bonds or other obligations issued or guaranteed pursuant to this act; and (3) prepaying the principal of and interest on bonds issued or guaranteed pursuant to this act.
c. Any revenues deposited in the growth fund shall not be considered part of the General Fund and shall not be commingled with General Fund moneys, and once deposited in the growth fund, such revenues may be paid as authorized by section 8 of this act.
5. A developer may submit a development plan to the State Treasurer who shall review the plan in consultation with the commissioner and the authority. The development plan shall include:
a. a description of the proposed development or redevelopment, and growth area, an estimate of the project cost, and a proposed construction schedule;
b. an estimate of the amount of new sales tax or other revenues that will be generated or anticipated to be generated as a consequence of the development or redevelopment for a period of thirty years;
c. an assessment of the economic and social benefits of the development;
d. a list and description of projects and projects costs for which assistance is sought;
e. an estimate of the taxable value of the assessed project upon completion of the development; and
f. such other information as the State Treasurer may require.
6. To qualify a development as eligible for State financing, the State Treasurer must determine that a development is located within a growth area, as described in the development plan, and will generate significant new sales tax or other revenues or economic benefits and and will create new jobs.
7. If the State Treasurer determines that a development is eligible for State financing pursuant to section 6 of this act, he shall thereafter determine, after consultation with the commissioner and the authority, that:
a. the proposed development or redevelopment is likely to be realized, and would not be likely to be accomplished by a developer without the creation of a growth area and the allocation of State financing or other assistance to projects or project costs;
b. the amount of sales tax or other revenues pledged from the growth fund is reasonably related to the amount needed by the developer or redeveloper to obtain the financing needed to effectuate the projects;
c. the credit of the State of New Jersey will not be pledged;
d. the creation of a growth area will contribute to the economic development of the State, and enhance the retail, commercial or entertainment activities available in the State and the quality of life therein;
e. the size of the proposed growth area does not exceed the capacity of the area and the amount of sales tax or other revenues pledged from the growth fund does not exceed the amount necessary to accomplish the goals of achieving economic growth, creating new tax revenues and creating new jobs;
f. providing financial assistance for projects and project costs will benefit the State, its political subdivisions or its citizens; and
g. the amount of sales tax revenue or other revenues pledged from the growth fund will not pose an inappropriate risk to or undue financial hardship on the State.
8. If the State Treasurer determines that the proposed development or redevelopment meets the criteria set forth in sections 6 and 7 of this act, he is authorized to:
a. (1) allocate up to one-half of the sales tax revenues received pursuant to the “Sales and Use Tax Act,” P.L.1966, c.30 (C.54:32B-1 et seq.) from the taxation of retail sales within a growth area, into the growth fund for such period of time, not exceeding 30 years, as he determines is necessary and desirable to effectuate the purposes of this act; (2) with respect to the allocation of sales tax revenues authorized by this subsection, the State Treasurer, notwithstanding any other law, rule, regulation or order to the contrary, is further authorized to collect the revenues and deposit them in the growth fund and make the allocations authorized by this subsection from the growth fund without having to deposit the revenues into the State's General Fund and the revenues shall not be commingled with or considered to be part of the State’s General Fund; (3) maintain separate accounts in the growth fund and allocate such moneys for a project or project costs in an amount sufficient to ensure their payment and the payment of principal of and interest on bonds issued pursuant to this act; and (4) apply moneys in the growth fund, which in his judgment, after consideration of the anticipated debt service obligations of a project and evaluation of the need to establish any reserve funds, exceed the amount needed to meet the requirements of paragraph (3) of this subsection, to other purposes of this act or for such other lawful purposes as are deemed appropriate by the State Treasurer;
b. make and enter into contracts or agreements with the authority to provide for conduit financing for projects or project costs through the issuance by the authority of bonds to be secured by moneys in the growth fund to pay for projects or project costs, provided that such bonds shall not constitute obligations of the growth fund, nor of the State of New Jersey or its General Fund but shall be obligations of the developer; and provided further that the payment of principal of and interest on any of the bonds shall not exceed the amounts in the growth fund;
c. make direct grants to developers, government agencies or others to fund a project or project costs;
d. make and enter into contracts or agreements with public agencies, nonprofit corporations or other suitable public or private persons, firms, corporations or associations, and make loans or grants to, or guarantee the obligations of, any other public agency or corporation, or other suitable public or private person as may be necessary, convenient or incidental to the execution of projects or projects costs on such terms as he deems appropriate;
e. enter into agreements or engage in other transactions with, and accept grants, loans, appropriations or other assistance or cooperation from, the United States or any agency thereof, or from the State or a county or municipal governing body or any agency thereof, or any nonprofit corporation or other suitable public or private person, firm, corporation or association in furtherance of the purposes of this act on such terms as he deems appropriate;
f. hire or consult with consultants, or to enter into agreements with public or private agencies; and
g. pay for projects and project costs, specifically including payments to a developer, as reimbursement for projects or project costs incurred by a developer, in accordance with a redevelopment agreement entered into by the developer for or with respect to a project.
9. Before allocating or pledging any sales tax or other revenues, and prior to the issuing of any bonds, incurring any obligations or guaranteeing or entering into contracts or agreements concerning the obligations of any other entity with respect to the project costs of any project, the State Treasurer shall adopt a final revenue allocation plan for the project. That plan shall include:
a. a description of the growth area, a description of the project or project costs to be financed, including the projected cost and construction schedule of the development;
b. a description of the development to be undertaken, including an estimate of the sales tax or other revenues anticipated to be generated from the development; and
c. a description of the sales tax or other revenues to be pledged to the support of the project.
10. Moneys in the growth fund may be invested in the State of New Jersey Cash Management Fund established pursuant to section 1 of P.L.1977, c.281 (C.52:18A-90.4). The State Treasurer may also invest and reinvest moneys in the growth fund, or any portion thereof, in such financial instruments as he deems appropriate. Any income from, interest on, or increment to moneys so invested or reinvested shall be included in the growth fund.
11. The Department of the Treasury shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as may be necessary to effectuate the purposes of this act.
12. This act shall take effect immediately.
STATEMENT
This bill authorizes the State Treasurer to establish a special fund in the State's General Fund to be known as the Economic Growth Fund. The bill also permits the Treasurer to deposit into the Economic Growth Fund up to one-half of the sales tax revenues that are received from economic growth areas designated in economic growth plans to be submitted to the Treasurer by developers. Although the revenues deposited into the Economic Growth Fund are derived from the State sales tax or other revenues collected by the Treasurer, the revenues shall not be considered part of the General Fund and shall not be commingled with the General Fund moneys.
The bill provides that the moneys deposited in the Economic Growth Fund may be used to pay for the principal and interest on bonds to finance, within a designated economic growth area or in certain adjacent locations, economic development projects that the Treasurer determines would not be undertaken without State financing.
In order to be eligible for State financing from the Economic Growth Fund, a developer may submit a development plan to the State Treasurer who shall review the plan, in consultation with the Commissioner of Commerce and Economic Development and the New Jersey Economic Development Authority, in accordance with criteria contained in the bill.
The bill requires the State Treasurer to determine that a proposed development will generate significant new sales tax or other revenues and new jobs before granting eligibility for State financing to a proposed development. The bill further requires the State Treasurer to make certain findings concerning the feasibility of the proposed development and the ability of the developer to complete the proposed development.
The bill is intended to provide a mechanism to encourage economic growth in this State and to promote the creation of new tax revenues and jobs that would not be likely to occur in the absence of State assistance.
Authorizes the issuance of bonds to finance development of projects in economic growth areas.