The New Jersey Senate recently passed legislation that would establish an economic development incentive program to encourage business growth in the commercial areas of smaller municipalities. A companion bill is pending before the Assembly Commerce and Economic Development Committee.
Main Street Assistance Program
Senate Bill No. 2256would establish the “Main Street Assistance Program” (program), under which the New Jersey Economic Development Authority (EDA) would provide financial and technical assistance to businesses located in the “Main Street area” within a small municipality. A municipality with a population of less than 20,000, according to the latest decennial census, can qualify if it is more than 70 percent developed, according to the 2012 New Jersey Department of Environmental Protection (DEP) land use/land cover data set. In addition, a county seat can qualify if its population was less than 11,000, according to the last census.
The bill authorizes the governing body of a small municipality to designate a Main Street area in the municipality. To designate a Main Street area, the governing body must provide a statement of intent to the EDA setting forth the municipality’s findings concerning the economic conditions existing in the Main Street area and the municipality’s intentions for addressing them.
For a business to be eligible to receive financial and technical assistance from the EDAunder the program, at least 15 percent of the full-time employees of the business must reside within the small municipality. Under the bill, the EDA must work with other State agencies to explore and implement opportunities to direct resources and create enhanced incentives for the Main Street area businesses participating in the program.
The bill provides Main Street area businesses participating in the program corporation business tax credits and gross income tax credits equal to 15 percent of the cost of employee compensation expenses. To provide funding for the program, the legislation calls for the EDA to establish the “Main Street Assistance Fund” for providing loans, loan guarantees, and technical assistance to area businesses located within a small municipality. The terms of a loan or loan guarantee and the amount of technical assistance would be at the discretion of the authority based on the moneys made available by the authority for the purposes of the fund. In addition, the EDA may provide technical assistance grants to small municipalities to improve the economy, appearance, and image of central business districts.
The state Senate unanimously passed Senate Bill No. 2256 on March 25, 2019. It now awaits consideration by the Assembly. We will continue to monitor the progress of the bill and post updates.
For more information about the proposed economic development incentive programor the legal issues involved, we encourage you to contact Michael A. Jimenez, Esq., Partner and a member of Scarinci Hollenbeck’s Government Law Group.