Bill to Allow UEZ Designated Municipalities to Participate in Loan Fund Program Goes to Governor

TRENTON — Legislation sponsored by Senator Sandra B. Cunningham and Senator Jeff Van Drew that would permit municipalities designated as urban enterprise zones (UEZ) to participate in the Downtown Business Improvement Zone Loan Fund program received final approval in the Senate. It now heads to the governor’s desk.
“Because the UEZ program is no longer operating as it was intended, towns and cities are not getting the recycled sales tax funding they historically received for improvements in their downtowns. At the same time, they remain ineligible for loan programs offered to other municipalities across the state,” said Senator Cunningham (D-Hudson). “This bill will help to provide some relief to municipalities by giving them the ability to apply for funding for beautification and improvements. Ultimately, this will give them another tool to help revitalize their downtowns and boost their local economies.”
The bill, S-3004, would allow municipalities that have been designated as an Urban Enterprise Zone, and that have a special improvement district that is designated as a downtown improvement zone, to apply for a long-term, zero interest loan from the Downtown Business Improvement Zone Loan Fund, operated by the Department of Community Affairs. The bill would require that these loans be for specific purposes and expenses relating to the redevelopment and rehabilitation of property within the designated business improvement zone.
Under the legislation, a municipality would be required to adopt an ordinance establishing all or a portion of its urban enterprise zone as a special improvement district in order to be eligible. The municipality would also need to adopt an ordinance designating all or a portion of that special improvement district as a downtown business improvement zone. After satisfying these requirements, the municipality would then be eligible to apply for a long-term, zero interest loan from the Downtown Business Improvement Zone Loan Fund.
“New Jersey’s businesses have benefited from improvements made to our downtowns and business districts through the UEZ program. Since revenue generated in the zones is no longer sent back to the local level, this bill will allow towns and cities to utilize funding made available to other municipalities to make needed improvements. These kinds of beautification projects are important to attracting businesses and jobs in some of our most challenged municipalities,” said Senator Van Drew (D-Cape May, Cumberland, Atlantic).
The Urban Enterprise Zone Program was enacted in 1983 to foster an economic climate that revitalizes designated urban communities and stimulates their growth by encouraging businesses to develop and create private sector jobs through public and private investment. Businesses located in the zones charge half the sales tax rate on purchases and historically a portion of the sales tax money was recycled back into the community for economic development. In communities such as Newark, Elizabeth and Jersey City, it provided significant funding for improvements in downtowns, and led to job creation and economic growth.
Governor Christie in 2011 started to divert UEZ funds and stopped retuning the sales tax revenue portions collected under the UEZ program to local municipalities. He has continued to follow this practice which, consequently, has stalled economic progress in the UEZs. This bill addresses the lack of opportunity for businesses located in an urban enterprise zone and allows for them to benefit from the Downtown Business Improvement Zone Loan Fund program.
The bill was approved in the Assembly by a vote of 45-16-3. The Senate approved it by a vote of 33-0.