ASSEMBLY COMMERCE AND MILITARY AND VETERANS' AFFAIRS COMMITTEE

 

STATEMENT TO

 

ASSEMBLY, No. 2968

 

STATE OF NEW JERSEY

 

DATED: DECEMBER 11, 1997

 

 

      The Assembly Commerce and Military and Veterans' Affairs Committee reports favorably Assembly Bill No. 2968.

      As reported, this bill authorizes any municipality that has established a special improvement district (pursuant to section 7 of P.L.1972, c.134; C.40:56-71) or a municipality with an abandoned or closed under ground or surface mine or quarry to designate an area primarily composed of retail businesses or services as a "downtown business improvement zone." This bill will not apply to municipalities in which an urban enterprise zone has been designated.

      Within a downtown business improvement zone, the municipality would receive a declining share of certain sales tax proceeds over a 15-year period. In the first five years following designation of the zone, 1/6 of all sales tax revenues generated from sales and services originating from and delivered from within the zone, but not more than $100,000 per year, would be set aside in a special zone fund to be used for projects or increased services to further public improvement within the zone. In the second five-year period, 2/18 of such sales tax revenues, but not more than $50,000 per year, would be directed into the special fund, and in the third five-year period, 1/18 of such sales tax revenues, but not more than $25,000 per year, would be directed into the special fund. Those funds not collected for the special fund would continue to be deposited into the General Fund.

      The State Treasurer would be the repository for all moneys collected for deposit into the downtown business improvement fund. In order to receive funding for projects or services out of the fund, the governing body of any municipality that has created a zone, and an administering entity, if any, which manages it, would be required to develop a proposal outlining a plan for a project or eligible services. The bill sets forth five requirements for a proposal, which include a description of the proposed project or services, an estimate of the total costs of the project or services, and a statement of other revenue sources to be used to finance the project or services.

      Upon adoption of the proposal by the governing body and the administering entity, if any, the proposal would be sent to the Division of Housing and Community Development at the Department of Community Affairs for evaluation and approval. The bill sets forth the criteria that the department is to use to evaluate such proposals.

      The services and projects provided for under the bill range from general marketing, business retention and recruitment services to a wide variety of capital improvements to make a zone more attractive and accessible.

 

FISCAL IMPACT

 

      It is estimated that the maximum amount of sales tax revenue loss to the State as a result of this bill may be $12.5 million during the first five years after a municipality designates a downtown business improvement zone, $6.25 million during the second five year period, and $3.125 million during the third five year period, for a total of maximum revenue loss to the State of approximately $21.875 during the fifteen period. This estimate is based on approximately 25 municipalities which currently have special improvement districts and do not have urban enterprise zone designations and would, therefore, be immediately eligible to establish downtown business improvement zones under this bill.

      These are estimated maximum amounts; in all likelihood, the losses will be less. Also, if additional zones become eligible, the estimated amounts will change.