SENATE, No. 257
STATE OF NEW JERSEY
Introduced Pending Technical Review by Legislative Counsel
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Senator GIRGENTI
An Act concerning the establishment of health enterprise zones.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. As used in this act:
"Authority" means the New Jersey Health Enterprise Zone Authority created by section 2 of this act;
"Health enterprise zone" or "zone" means a health enterprise zone designated by the authority pursuant to this act;
"Health enterprise zone development corporation" means a nonprofit corporation or association created pursuant to section 5 of this act;
"Qualified business" means any entity authorized to do business in the State of New Jersey which is engaged in the active conduct of a health-related trade or business in a health enterprise zone which meets criteria established by the authority.
"Zone development plan" means a plan adopted by the governing body of a qualifying municipality for the development of a health enterprise zone therein, and for the direction and coordination of activities of the municipality, zone businesses and community organizations within the health enterprise zone toward the economic betterment of the residents of the zone and the municipality;
"Zone neighborhood association" means a corporation or association of persons who either are residents of, or have their principal place of employment in, a municipality in which a health enterprise zone has been designated pursuant to this act; which is organized under the provisions of Title 15 of the Revised Statutes or Title 15A of the New Jersey Statutes; and which has for its principal purpose the encouragement and support of community activities within, or on behalf of, the zone so as to: (1) stimulate economic activity; (2) increase or preserve residential amenities; or (3) otherwise encourage community cooperation in achieving the goals of the zone development plan.
2. There is created the New Jersey Health Enterprise Zone Authority, which shall consist of 13 members as follows: the Commissioner of Commerce, Energy and Economic Development who shall be chair of the authority, the Commissioner of Health, the Commissioner of Community Affairs; the Commissioner of Labor and the State Treasurer, or their designees; two members of the Senate to be appointed by the President of the Senate, who shall not be members of the same political party; two members of the General Assembly to be appointed by the Speaker of the General Assembly, who shall not be members of the same political party; and four public members not holding any other office, position or employment in the State Government, nor any local elective office, who shall be appointed by the Governor with the advice and consent of the Senate, and who shall be qualified for their appointments by training and experience in the areas of local government finance, health care, economic development and redevelopment, or volunteer civic service and community organization. No more than two public members shall be of the same political party.
3. For purposes of compliance with Article V, Section IV, paragraph 1 of the Constitution of the State of New Jersey, the authority created by this act is allocated to the Department of Commerce, Energy and Economic Development. All clerical and professional assistants, and all personnel, procurement, budgetary and other administrative services necessary or incidental to its proper functioning shall be provided by and through that department.
It shall be the duty of the authority to:
a. Promulgate criteria for the designation of a zone pursuant to the provisions of this act;
b. Receive and evaluate applications of municipalities for the designation of a zone;
c. Enter into discussions with applying municipalities regarding health zone development proposals;
d. Act as agent of the State with respect to zone development plans, and in determining the State-furnished components to be included in those plans;
e. Designate a zone in accordance with the provisions of this act and promulgate rules and regulations necessary to carry out its duties under this act;
f. Exercise continuing review and supervision of the implementation of zone development plans;
g. Establish criteria for the designation of a qualified business pursuant to the provisions of this act;
h. Assist and represent qualifying municipalities in any negotiations with, or proceedings before, other agencies of State government or of the federal government, to secure necessary or appropriate assistance, support and cooperation of those agencies in the implementation of zone development plans in accordance with the provisions of this act and any other applicable State or federal law;
i. Upon request, assist agencies of municipal government in gathering, compiling and organizing data to support an application for designation of a zone, and in identifying and coordinating the elements of a zone development proposal suitable for the zone sought to be designated;
j. Provide assistance to State and local government agencies relating to application for permits, licenses and other regulatory approvals required by those agencies, to assure consideration and expeditious handling of regulatory requirements of any qualified zone business or zone neighborhood association. Regulatory agencies of the State and its agencies and instrumentalities may agree to any simplification, consolidation or other liberalization of procedural requirements which may be requested by the authority and which is not inconsistent with provisions of law; and
k. Exercise continuing review of the implementation of this act, and to report annually to the Governor and the Legislature on the effectiveness of health enterprise zones, including any recommendations for legislation to improve the effectiveness of operation of these zones. The report shall be submitted one year from the effective date of this act, and annually thereafter.
4. The authority shall designate a health enterprise zone from among those areas in qualifying municipalities as determined in accordance with section 6 of this act.
5. The governing body of a qualifying municipality may, by ordinance, create a nonprofit corporation pursuant to the provisions of Title 15A of the New Jersey Statutes to act as the health zone development corporation for the municipality. Any health zone development corporation so created shall include on its board of directors representatives of the government of the qualifying municipality, members of the business community including medical and health-related businesses, and representatives of community organizations in the municipality, and the total membership of the board of directors shall be broadly representative of businesses and other community organizations within the municipality.
Notwithstanding the provisions of any other law to the contrary, a health zone development corporation shall be considered to be a local development corporation for the purpose of receiving any State financial or technical assistance as may be available, and the creation of a health zone development corporation shall not preclude a qualifying municipality from creating another local development corporation for the municipality with responsibilities not related to the health enterprise zone, nor preclude that other corporation from receiving State financial or technical assistance.
Before applying for designation of a health enterprise zone, the municipal governing body shall cause a preliminary zone development plan to be formulated, either by a zone development corporation or by the governing body, with the assistance of those officers and agencies of the municipality as the governing body may see fit. The preliminary zone development plan shall set forth the boundaries of the proposed health enterprise zone, findings of fact concerning the economic and social conditions existing in the area proposed for a health enterprise zone, and the municipality's policy and intentions for addressing these conditions, and may include proposals respecting:
a. Utilizing the powers conferred on the municipality by law for the purpose of stimulating investment in and economic development of the proposed zone;
b. Utilizing State assistance through the provisions of this act relating to exemptions from, and credits against, State taxes;
c. Securing the involvement in, and commitment to, zone economic development by private entities, including zone neighborhood associations, voluntary community organizations supported by residents and businesses in the zone;
d. Utilizing the powers conferred by law to revise municipal planning and zoning ordinances and other land use regulations as they pertain to the zone, in order to enhance the attraction of the zone to prospective health-related businesses and industries;
e. Increasing the availability and efficiency of support services, public and private, generally used by and necessary to the efficient functioning of health-related businesses and industries in the area, and the extent to which the increase or improvement is to be provided and financed by the municipal government or by other entities.
6. No municipality shall be determined to be a qualified municipality unless it meets all the following criteria:
a. The rate of unemployment among residents in the area and among residents of the municipality exceeds 1.5% of the national unemployment rate as determined by the most recently available data from the Bureau of Labor Statistics in the United States Department of Labor;
b. At least 20% of the population of the area to be designated as the health enterprise zone and of the population of the municipality receive incomes below the poverty level, as defined by the United States Department of Labor;
c. It is a city of the second class with a population greater than 137,000 and less than 142,000, according to the latest federal decennial census.
d. There is a regional teaching hospital within the municipality.
7. a. In designating an eligible area as a health enterprise zone, the authority shall accord preference to zone development plans which:
(1) Have the greatest potential for success in stimulating primarily new economic activity in the area;
(2) Are designed to address the greatest degree of urban distress, as measured by existing levels of unemployment, poverty, and property tax arrearages;
(3) Demonstrate the most substantial and reliable commitments of resources by zone businesses, zone neighborhood associations, health-related educational programs, voluntary community organizations and other private entities to the economic success of the zone;
(4) Demonstrate the most substantial effort and commitment by the municipality to encourage economic activity in the area and to remove disincentives for job creation compatible with the fiscal condition of the municipality.
b. In addition to the considerations set forth in subsection a. of this section, in evaluating a zone development plan for designation purposes, the authority shall consider:
(1) The adverse or beneficial effects of a health enterprise zone located in the proposed area upon economic development activities or projects of State or other public agencies which are in operation or are approved for operation, in the qualifying municipality;
(2) The degree of commitment made by public and private entities to utilize minority contractors and assure equal opportunities for employment in connection with any construction or reconstruction to be undertaken in the eligible area;
(3) The impact of the zone development plan upon the social, natural and historic environment of the eligible area;
(4) The degree to which the implementation of the plan involves the relocation of residents from the eligible area, and the adequacy of commitments and provisions with respect thereto.
8. a. A qualifying municipality may designate any area set forth in the zone development plan as a health enterprise zone.
b. Upon receipt of an application from a qualifying municipality the authority shall review the application to determine whether the area described in the application qualifies for State assistance under the criteria of this act.
c. Upon organization the authority shall establish a date for the receipt of initial applications for designation under this act, which shall be within six months of the effective date of this act. Thereafter, the authority shall complete its review within 60 days of receipt of an application, but may extend this time period by an additional 60 days if necessary. If the authority denies the application, it shall inform the
municipality of that fact in writing setting forth the reasons for the denial.
d. The designation of a health enterprise zone by the authority shall take effect upon the adoption by the qualifying municipality of an ordinance accepting that designation.
9. Except as otherwise specified in this act, a qualified business in a health enterprise zone shall be eligible to receive those benefits authorized in sections 10 through 14 of this act as are determined by the authority. The authority shall state in writing to the qualifying municipality at the time of designation its determinations as to which of those benefits are to apply in a given health enterprise zone.
Any qualified business that receives any benefit provided pursuant to sections 10 through 14 of this act shall annually certify to the authority that it is a qualified business. Failure to supply the certification or willful falsification of data in the certification will result in a fine of not more than ten times the benefits received, nor more than two years in prison.
10. Any qualified business subject to the provisions of the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), as employing a larger number of persons at a place of business located within a health enterprise zone designated pursuant to this act than at all other places of business of the taxpayer within the State, may be exempt from the net worth tax imposed pursuant to subsection (a) of section 5 of P.L.1945, c.162 (C.54:10A-5(a)), and from the tax imposed by subsection (f) of that section (C.54:10A-5(f)). The provisions of this section are subject to the phase-out provisions of P.L.1982, c.55 (C.54:10A-4 et seq.).
11. a. Any qualified business subject to the provisions of the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), actively engaged in the conduct of a health-related business, as determined by the authority, from a location within a health enterprise zone designated pursuant to this act, which business at that location consists primarily of manufacturing or other business which is not retail sales or warehousing oriented, may receive a health enterprise zone employee tax credit against the amount of tax imposed under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.), as hereinafter provided:
(1) A one-time credit of $1,500 for each new full-time, permanent employee employed at that location who is a resident of the qualifying municipality in which the designated health enterprise zone is located, and who immediately prior to employment by the taxpayer was unemployed for at least 90 days, or was dependent upon public assistance as the primary source of income;
(2) A one-time credit of $500 for each new full-time, permanent employee employed at that location who is a resident of a qualifying municipality in which the designated health enterprise zone is located, or any other qualifying municipality in which a health enterprise zone is located, who does not meet the requirements of paragraph (1) of this subsection, and who was not, immediately prior to employment by the taxpayer, employed at a location within the qualifying municipality.
b. If approved by the authority, the health enterprise zone employee tax credit shall be allowed in the tax year immediately following the tax year in which the new full-time, permanent employee was first employed by the taxpayer.
c. A tax credit shall be permitted under this section only for those new full-time, permanent employees who have been employed for at least six continuous months by the taxpayer during the tax year for which the tax credit is claimed.
d. A newly employed employee shall not be deemed a new full-time, permanent employee for the purposes of this section unless the total number of full-time, permanent employees, including the newly employed employee, employed by the employer in the zone during the calendar year exceeds the greatest number of full-time, permanent employees employed in the zone by the employer during any prior calendar year during the period commencing with the date of zone designation.
12. Health enterprise zone employee tax credits provided pursuant to section 11 of this act shall not reduce a taxpayer's tax liability under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) in any tax year by more than 50% of the amount otherwise due, but employee tax credits remaining and unused in a tax year may be carried forward by the taxpayer to the next succeeding tax year and applied against 50% of the amount of tax otherwise due in that succeeding tax year.
13. Retail sales of tangible personal property, except motor vehicles, and sales of services to a qualified business for the exclusive use or consumption of such business within a health enterprise zone may be exempt from the taxes imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).
14. Receipts of retail sales of health-related manufacturing machinery, equipment or apparatus, made by a certified vendor from a place of business owned or leased and regularly operated by the vendor for the purpose of making retail sales, and located in the designated health enterprise zone established pursuant to this act, may be exempt 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.). Any vendor, which is a qualified business having a place of business located in a designated health enterprise zone, may apply to the Director of the Division of Taxation in the Department of the Treasury for certification pursuant to this section. The director may certify a vendor if he shall find that the vendor owns or leases and regularly operates a place of business located in the designated health enterprise zone for the purpose of making retail sales, that items are regularly exhibited and offered for retail sale at that location, and that the place of business is not utilized primarily for the purpose of catalogue or mail order sales. The certification under this section shall remain in effect during the time the business retains its status as a qualified business meeting the eligibility criteria pursuant to this act. However, the director may at any time revoke a certification granted pursuant to this section if he shall determine that the vendor no longer complies with the provisions of this section.
Notwithstanding any other provisions of law to the contrary, all revenues received from the taxation of retail sales made by certified vendors from business locations in the designated health enterprise zone to which this exemption shall apply, shall be deposited immediately upon collection by the Department of the Treasury in the health enterprise zone assistance fund created pursuant to section 20 of this act.
The revenues required to be deposited in the health enterprise zone assistance fund pursuant to this section shall be used for the purposes of that fund and for the uses prescribed in section 20 of this act, subject to annual appropriations being made for those purposes and uses.
15. Within 90 days of the enactment of this act, the Director of the Division of Taxation in the Department of the Treasury shall promulgate such rules and regulations as may be necessary to effectuate the provisions of sections 10 through 14 of this act, and the Commissioner of Commerce, Energy and Economic Development shall promulgate such rules and regulations as may be necessary to effectuate the provisions of section 9 of this act.
16. The Department of Labor shall develop and coordinate the delivery of skill training programs necessary to meet the needs of qualifying businesses.
17. In order to carry out the purposes of this act, any municipality or State agency may exempt a designated health enterprise zone from the provisions of any regulation, in whole or in part, promulgated by that entity or agency, but the health enterprise zone shall not be exempted from the provisions of any regulation, except upon finding by the State or municipal agency, as appropriate, that the exemption would not endanger the health and safety of the citizens of the State.
18. The authority shall conduct a continuing review of all State regulations and shall recommend to the appropriate administrative bodies the modification or waiver of regulations promulgated by that agency in order to contribute to the implementation of this act.
19. To be eligible for any of the incentives provided under this act a qualified business must demonstrate to the satisfaction of the authority that:
a. The business will create new employment in the municipality; and
b. The business will not create unemployment in other areas of the State, including the municipality in which the zone is located.
20. a. There is created a health enterprise zone assistance fund to be held by the State Treasurer, which shall be the repository for all moneys required to be deposited therein pursuant to section 14 of this act 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 promulgate the rules and regulations necessary to govern the administration of the fund for the purposes of this section.
b. The health enterprise zone assistance fund shall be used for the purpose of assisting a qualifying municipality in which a health enterprise zone is designated in undertaking public improvements and in upgrading eligible municipal services in designated enterprise zones.
c. The governing body of a qualifying municipality in which a health enterprise zone is designated and the zone development corporation created by the municipality for that health enterprise zone may, by resolution jointly adopted after public hearing, propose to undertake a project for the public improvement of the health enterprise zone or to increase eligible municipal services in the health enterprise zone, and to fund that project or increase in eligible municipal services from moneys deposited in the health enterprise zone assistance fund and credited to the account maintained by the State Treasurer for the health 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 health 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; and
(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 in the area of the health enterprise zone as set forth in the zone development plan approved by the authority.
As used in this section, "project" means the purchasing, leasing, condemning, or otherwise acquiring of land or other property, or an interest therein, in the health enterprise zone or as necessary for a right-of-way or other easement to or from the health enterprise zone; the relocating and moving of persons 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 a land or a building, street, highway, alley, utility, service or other structure or improvement; the acquisition, construction, reconstruction, rehabilitation, or installation of public facilities and improvements, except buildings and facilities for the general conduct of government and schools; and the costs associated therewith, including the costs of an administrative appraisal, economic and environmental analyses or engineering, planning, design, architectural, surveying or other professional services necessary to effectuate the project.
As used in this section, "eligible municipal services" means the hiring of additional police or firefighters assigned duties in the health 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 health 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 finds:
(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 health 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 police or firefighters 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 health 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 health enterprise zone account; and that the estimated annual payments for the eligible municipal services from the health 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 health enterprise zone account in the health enterprise zone assistance fund with respect to each 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 health 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 municipality 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 health enterprise zone assistance fund the amount so certified, within the limits of the amounts credited to the health enterprise zone account of the qualifying municipality.
21. Section 15 shall take effect immediately, the remainder of the act shall take effect on the 90th day following enactment and the act shall expire three years after the effective date.
STATEMENT
This bill provides for the establishment of a health enterprise zone in one municipality in the State for a three-year period. A municipality which meets all of the bill's criteria with respect to unemployment, poverty, population, and the presence of a teaching hospital may apply for designation as a health enterprise zone. Presently, the only municipality in the State which meets these criteria is Paterson.
In addition, the bill creates a 13-member Health Enterprise Zone Authority.
The bill is modeled after the "New Jersey Urban Enterprise Zone Act," P.L.1983, c.303 (C.52:27H-60 et seq.) and provides tax incentives similar to those provided in that act to qualifying businesses within the health enterprise zone. Tax incentives which may be provided to qualified business located in the health enterprise zone include:
1) an exemption from the net worth tax imposed pursuant to subsections (a) and (f) of section 5 of P.L.1945, c.162 (C.54:10A-5(a) and (f)) for certain qualified businesses subject to the Corporation Business Tax Act;
2) employee tax credits against the amount of tax imposed under the Corporation Business Tax Act, for qualified businesses subject to that act, in the following amounts:
- a one-time credit of $1,500 for each new full-time, permanent employee employed at that location who is a resident of the municipality in which the health enterprise zone is located, and who immediately prior to employment by the taxpayer was unemployed for at least 90 days, or was dependent upon public assistance as the primary source of income; and
- a one-time credit of $500 for each new full-time, permanent employee employed at that location who is a resident of the municipality in which the enterprise zone is located who does not meet the requirements of the preceding paragraph, and who was not, immediately prior to employment by the taxpayer, employed at a location within the municipality.
These tax credits, however, cannot reduce a taxpayer's tax liability under the Corporation Business Tax Act by more than 50% of the amount otherwise due in any given year.
3) An exemption from the sales tax for retail sales of tangible personal property, except motor vehicles, and sales of services to a qualified business for the exclusive use or consumption of such business within the enterprise zone; and
4) A 50% reduction in the sales tax for retail sales of health-related manufacturing machinery, equipment or apparatus, made by a certified vendor from a place of business owned or leased and regularly operated by the vendor for the purpose of making retail sales, and located in the enterprise zone. All revenues received from the taxation of retail sales made by certified vendors from business locations in the health enterprise zone to which this sales tax exemption would apply, would be deposited immediately upon collection by the Department of the Treasury. These tax receipts will be deposited into the health enterprise zone assistance fund, created in the bill.
The funds in the health enterprise zone assistance fund can be used by the municipality: (1) to undertake public improvements, such as purchasing land for a right-of-way, demolition and relocation of persons displaced by the acquisition of land or property; and (2) upgrade municipal services, such as hiring additional police and firemen, in the enterprise zone.
The bill also provides that a qualifying municipality may create a nonprofit corporation to act as the local health zone development corporation for the purpose of receiving any State financial or technical assistance as may be available.
Provides for establishment of health enterprise zones.