UEZ Funds on State’s Budget Chopping Block

WILDWOOD — A state economic development program that’s brought millions of dollars to the Wildwoods over the past eight years is on Gov. Chris Christie’s chopping block in his FY 2011 state budget.
Christie has proposed ending Urban Enterprise Zone (UEZ) aid to municipalities. Wildwood UEZ Coordinator Lou Ferrara doesn’t understand why the governor would target a program that actually helps support businesses and create jobs.
According the state Department of Community Affairs Web site, New Jersey’s UEZ program was created 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.
The four Wildwood communities — North Wildwood, West Wildwood, Wildwood and Wildwood Crest — are considered one Urban Enterprise Zone. Statewide there are 32 zones in 37 municipalities.
Qualified businesses participating in the UEZ program can charge half the standard sales tax rate on certain purchases. The standard rate is 7 percent; UEZ businesses charge 3.5 percent.
Revenue generated from the UEZ sales tax is maintained in a Zone Assistance Fund (ZAF) locally and dedicated to use within the zone for certain economic development and/or public service improvement projects. To date, more than 2,281 such projects have been approved statewide at a value of $774 million.
Throughout the state, the UEZ program supports more than 6,500 businesses, 139,000 full-time jobs and has attracted $26.4 billion in private investment.
In the eight years the Wildwoods have been in the UEZ program, a number of projects with a total value over $10 million were completed, according to Ferrara. Notable projects include several parking and streetscape projects and over $6 million in refurbishing projects on the world-famous Wildwoods Boardwalk, which Ferrara called the “economic heart of the Wildwoods.”
Because of the UEZ funding, Ferrara said the projects also received matching funds from the United States Department of Agriculture Rural Development office and other funding sources.
“The UEZ funding and tax incentives help keep this resort community competitive not only with shopping malls throughout the region, but also with the Disneys and other tourist destinations throughout the country and the world,” Ferarra told the Herald.
The governor’s plan:
“All revenue sharing for UEZ economic development projects and administration will be put on hold,” according to the governor’s budget brief. “The Economic Development Authority (EDA) will be charged with reviewing the structure of the current program, as well as undertaking an analysis to determine whether the UEZ concept is a good tool for encouraging economic development.”
Under the governor’s plan, businesses in UEZ zones will continue to charge half the standard sales tax rate and continue to receive some tax-related assistance, but the state will keep the proceeds not the municipalities.
One of the most frequently asked questions of the governor’s budget: Will ending UEZ aid not result in struggling areas losing ground in their redevelopment efforts?
The response from Christie’s office was “There have been no conclusive studies that show the grant component of the UEZ programs work, and it is time that these special aid programs take a breather while we determine if they should remain or be reformed in some way…We need to fund programs that truly incentivize development and create quality-paying jobs.”
Ferrara said that even more disturbing than keeping the UEZ fund money, of which the Wildwood’s held about $1.2 million, was that the governor also plans to freeze the administration.
“The municipal office here would effectively shut down on July 1 if this happens,” he said. “This would affect existing and future projects in these communities.”
Ferrara cited a planned band shell in Wildwood Crest as well as closed-circuit television systems on the Boardwalk and downtown Wildwood as local UEZ projects in jeopardy because of the governor’s plan.
However, there may be hope for the UEZ program.
The state Senate’s Community and Urban Affairs Committee, chaired by local Sen. Jeff Van Drew (D-1st), will host a hearing April 12 in Trenton, where representatives from the each of the state’s UEZ communities are expected to present testimony and success stories hoping to save the program.
“It’s an exhibit to show what a profound effect the UEZs have on the State of New Jersey and that they should live their full course,” Van Drew told TheDailyJournal.com.
Ferrara told the Herald he hopes they’re successful in persuading the Senate panel and the governor to keep the UEZ in tact.
This story was first published at capemaycountyherald.com
Contact Hart at (609) 886-8600 Ext 35 or at: jhart@cmcherald.com