UEZs Sunset in Five NJ Municipalities After No Action by Christie

Urban enterprise zones have expired in five New Jersey municipalities. While the Legislature approved a compromise bill extending the UEZs for another two years, Gov. Chris Christie has yet to act on it.

The proposed bill (A-4189/S-2670), which has been approved by the Senate and Assembly, would have prevented UEZ designations from expiring in Bridgeton, Camden, Newark, Plainfield and Trenton at the end of 2016. As previously discussed on this blog, the UEZ designation expires after 20 years and allows one 16-year extension.

Last year, lawmakers approved legislation to extend the designation of all previously designated UEZs for a one-time period of 10 years. However, Gov. Christie issued a conditional veto based on the “UEZ program’s lack of demonstrable success.” In his veto notice, Gov. Christie made several recommendations and specifically asked the Legislature to direct the Commissioner of the Department of Community Affairs to conduct a study of the UEZ program “… which shall include, without limitation, an assessment of whether an alternative, location-based program to assist fiscally distressed municipalities is appropriate, and, if so, recommendations for the parameters of such a program …

In response to Gov. Christie’s concerns, the bill requires the Commissioner of Community Affairs to review and analyze the UEZ program and to issue a report within six months of enactment. The report must assess whether, as UEZs expire, an alternative, location-based program to assist fiscally distressed municipalities is appropriate. If so, the report must recommend what the parameters of the program should be in order to provide a sufficient return on State investment.

In addition, A-4189/S-2670 alters the permissible use of UEZ funds. After first depositing 10 percent of the gross amount of all revenues received from the reduced taxation of retail sales made by qualified businesses from business locations in Bridgeton, Camden, Newark, Plainfield, and Trenton into the account created in the name of the UEZ Authority in the Enterprise Zone Assistance Fund, the remaining 90 percent of revenue must be deposited to the State General Fund. The bill also amends current law to limit the use of money deposited to the Enterprise Zone Assistance Fund.  The bill provides that money deposited to the fund from tax revenues collected by qualified businesses in all UEZs throughout the State is to be used to assist qualifying municipalities in undertaking economic development projects.

It is unclear if the revised bill will alleviate Gov. Christie’s concerns regarding UEZs. If enacted after the UEZ sunset date, the bill states that it is retroactive to January 1, 2017.

For more information about the UEZ bill or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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