SENATE, No. 2287

STATE OF NEW JERSEY

221st LEGISLATURE

PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION

Sponsored by:

Senator  NICHOLAS P. SCUTARI

District 22 (Somerset and Union)

Senator  PATRICK J. DIEGNAN, JR.

District 18 (Middlesex)

Co-Sponsored by:

Senators Pou, Ruiz and Turner

SYNOPSIS

     Establishes NJ Non-Profit Loan Guarantee Pilot Program within EDA.

CURRENT VERSION OF TEXT

     Introduced Pending Technical Review by Legislative Counsel.

An Act establishing the New Jersey Non-Profit Loan Guarantee Pilot Program within the New Jersey Economic Development Authority and supplementing P.L.1974, c.80 (C.34:1B-1 et seq.). 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

     1.    As used in P.L.   , c.    (C.          ) (pending before the Legislature as this bill):

     "Authority" means the New Jersey Economic Development Authority established pursuant to section 4 of P.L.1974, c.80 (C.34:1B-4). 

      "Guarantee fund" or "fund" means the "New Jersey Non-Profit Loan Guarantee Fund" established pursuant to section 3 of P.L.       , c.        (C.            ) (pending before the Legislature as this bill).

     "Participating bank" means a State- or federally-chartered bank, savings bank or savings and loan association, or a bank organized under the laws of a foreign government, deemed eligible by the authority for participation in the program. 

     "Program" means the "New Jersey Non-Profit Loan Guarantee Pilot Program" established by the authority pursuant to section 2 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill). 

     2.    a.  The New Jersey Economic Development Authority shall establish and maintain a "New Jersey Non-Profit Loan Guarantee Pilot Program" for the purpose of providing financial assistance from the "New Jersey Non-Profit Loan Guarantee Fund," established pursuant to section 3 of P.L.   , c.    (C.         ) (pending before the Legislature as this bill), in the form of loan guarantees for non-profit organizations established in the State.

     b.    Applications for loan guarantees shall be submitted by non-profit organizations in a form and manner determined by the authority.  In addition to any other information that the authority may deem appropriate, the application shall require the non-profit organization to submit proof that the non-profit organization has:

     (1)   been determined by the federal Internal Revenue Service to be a tax-exempt organization pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, 26 U.S.C. s.501(c)(3);

     (2)   been in existence for 10 years prior to the effective date of P.L.    , c.    (C.       ) (pending before the Legislature as this bill); and

     (3)   received financial assistance from the State, including grants, loans, or any other form of assistance, prior to the effective date of P.L.    , c.    (C.       ) (pending before the Legislature as this bill).

     c.     In evaluating an application submitted by a non-profit organization pursuant to subsection b. of this section, the authority may only approve the application if the authority determines:

     (1)   that the loan for which the application for a loan guarantee has been submitted is expected to result in the creation of 10 or more full-time jobs upon completion of construction of a new physical space financed pursuant to P.L.    , c.    (C.        ) (pending before the Legislature as this bill);

     (2)   based on projections submitted by the non-profit organization, including the data and assumptions forming the basis thereof, of the profitability and financial stability over the term of the loan guarantee, that the loan for which the application for a loan guarantee has been submitted will support the construction of a new physical space that is capable of generating income sufficient to repay the loan through box office sales, private donations, sponsorships, or any other source of revenue; and

     (3)   that the non-profit organization has a record of financial stability, good reputation, and credit worthiness.

     3.    a.  To implement the program, the authority shall establish and maintain a special revolving fund to be known as the "New Jersey Non-Profit Loan Guarantee Fund," which shall be credited with:

     (1) any amounts from the "Economic Recovery Fund," established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12), that the authority determines are necessary to effectively implement the program, within the limits of funding available from the "Economic Recovery Fund";

     (2) any moneys that shall be received by the authority from the repayment of the moneys in the guarantee fund used to provide loan guarantees pursuant to P.L.    , c.    (C.       ) (pending before the Legislature as this bill) and interest thereon; and

     (3) any other moneys of the authority, including but not limited to, any moneys available from other business assistance programs administered by the authority that are authorized and determined by the authority to be deposited in the guarantee fund.

     b.    The authority shall use the moneys in the guarantee fund to:

     (1) enter, within six months of the effective date of P.L.   , c.           (C.       ) (pending before the Legislature as this bill), into loan guarantee agreements with participating banks and non-profit organizations, which meet the requirements set forth in subsections b. and c. of section 2 of P.L.    , c.    (C.         ) (pending before the Legislature as this bill), to guarantee a portion of the loans or lines of credit provided by participating banks, in accordance with section 4 of P.L.    , c.    (C.         ) (pending before the Legislature as this bill); and

     (2)  defray the administrative expenses of the authority in carrying out the purposes and provisions of P.L.    , c.    (C.       ) (pending before the Legislature as this bill).

     c.     Moneys in the guarantee fund may be invested in such obligations as the authority may approve and, except as otherwise provided in section 4 of P.L.    , c.    (C.       ) (pending before the Legislature as this bill), net earnings received from the investment or deposit of moneys in the guarantee fund by the authority shall be redeposited in the guarantee fund for use for the purposes of P.L.    , c.    (C.       ) (pending before the Legislature as this bill).

     4.    a.  After approving an application submitted pursuant to section 2 of P.L.    , c.    (C.        ) (pending before the Legislature as this bill), the authority shall enter into an agreement with a participating bank and the non-profit organization to use the moneys from the guarantee fund to guarantee a direct loan or revolving line of credit provided by the participating bank to finance the construction of a new physical space by the qualified non-profit organization, pursuant to paragraph (2) of subsection c. of section 2 of P.L.    , c.    (C.       ) (pending before the Legislature as this bill).  Each loan guarantee agreement that the authority shall enter into with a participating bank and non-profit organization shall not exceed $15 million per qualified applicant. 

     b.    No loan guarantee agreement entered into pursuant to this section shall be for a period of more than 20 years.  Upon expiration of the period of all loan guarantees entered into pursuant to P.L.    , c.    (C.       ) (pending before the Legislature as this bill), all repayments, and interest thereon, and all moneys remaining in the guarantee fund shall be credited to and deposited in the "Economic Recovery Fund," established pursuant to section 3 of P.L.1992, c.16 (C.34:1B-7.12) for any of the purposes thereof.

     c.     The loan guarantee agreements shall provide that the loans or lines of credit for financing the costs of qualified non-profit organizations shall come from participating banks. The agreements may also provide for any other terms or conditions that the authority and the participating banks determine as being necessary or desirable to effectuate the purpose of the program.

     d.    The authority shall establish sufficient reserves and liquid reserves to provide a sufficient and actuarially sound basis for its pledges contained in any loan guarantee agreement entered into pursuant to P.L.    , c.    (C.       ) (pending before the Legislature as this bill).

     5.    a.  Within 24 months following the effective date of P.L.    , c.    (C.       ) (pending before the Legislature as this bill), and on or before February 15 of each year thereafter in which a loan guarantee agreement entered into under of P.L.    , c.    (C.       ) (pending before the Legislature as this bill) is in effect, the authority shall prepare a report on the program. The report may be issued separately, or in combination with any reports required by any law concerning financial assistance to non-profit organizations in this State.

     b.    The report shall include, but need not be limited to, a description of the demand for the program from qualified non-profits and participating banks, the efforts made by the authority to promote the program, the total amount of loan guarantees approved by the authority under the program, and an assessment of the effectiveness of the program in meeting the goals of P.L.    , c.    (C.       ) (pending before the Legislature as this bill). The authority shall submit its report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature, including therein any recommendations for legislation to improve the effectiveness of the program.

     6.    This act shall take effect immediately.

STATEMENT

     This bill requires the New Jersey Economic Development Authority ("EDA") to establish and maintain the New Jersey Non-Profit Loan Guarantee Pilot Program ("program") and the New Jersey Non-Profit Loan Guarantee Fund ("fund").

      Under the bill, the authority is required, within six months of the effective date of the bill, to provide financial assistance in the form of loan guarantees to non-profit organizations to support the construction of new physical spaces that are capable of generating income sufficient to repay the loans.

Application Criteria

      The bill requires the EDA to establish an application process. A non-profit organization that seeks a loan guarantee agreement under the program is required to submit an application to the EDA in a form and manner prescribed by the EDA. In addition to any other information that the EDA may deem appropriate, the application is required to request the non-profit organization to submit proof that the non-profit organization has:

      1)   been determined by the federal Internal Revenue Service to be a tax-exempt organization pursuant to federal law;

      2)   been in existence for 10 years prior to the effective date of the bill; and

      3)   received financial assistance from the State, including grants, loans, or any other form of assistance prior to the effective date of the bill.

      The EDA may only approve the application if the EDA determines:

      1)   that the loan for which the application for a loan guarantee has been submitted is expected to result in the creation of 10 or more full-time jobs upon completion of construction of a new physical space financed under the provisions of the bill;

      2)   based on the projections by the non-profit organization, including the data and assumptions forming the basis thereof, of the profitability and financial stability over the term of the loan guarantee, that the loan for which the application for a loan guarantee has been submitted will support the construction of new physical space that is capable of generating income sufficient to repay the loan through box office sales, private donations, sponsorships, or other sources of revenue; and

      3)   that the non-profit organization has a record of financial stability, good reputation, and credit worthiness.

Loan Guarantee Agreements

      Under the bill, the EDA would enter into an agreement with a participating bank and a non-profit organization qualified pursuant to the bill to use the moneys from the fund to guarantee a direct loan or revolving line of credit provided by the participating bank to finance the construction of a new physical space by the qualified non-profit organization. Each loan guarantee agreement that the EDA enters into with a participating bank and non-profit organization will not exceed $15 million per qualified applicant or a period of more than 20 years. The agreements are also required to provide for any other terms or conditions that the EDA and the participating banks determine as being necessary or desirable to effectuate the purpose of the program.

      The EDA is also required to establish sufficient reserves and liquid reserves to provide a sufficient and actuarially sound basis for its pledges contained in any loan guarantee agreement entered into pursuant to the bill.

Loan Fund

      The bill requires the fund to be credited with:

      1)   an amount from the Economic Recovery Fund that the EDA determines is necessary to effectively implement the program, within the limits of funding available from the Economic Recovery Fund;

      2)   any moneys received by the EDA from the repayment of the moneys in the guarantee fund used to provide loan guarantees pursuant to the bill and interest thereon; and

      3)   any other moneys of the EDA, including but not limited to, any moneys available from other business assistance programs administered by the EDA that are authorized and determined by the EDA to be deposited in the fund.

Report Requirements

      Finally, within 24 months following the effective date of the bill, and on or before February 15 of each year thereafter in which a loan guarantee agreement entered into under the bill is in effect, the EDA is required to prepare a report on the program. The report may be issued separately, or in combination with any reports required by any law concerning financial assistance to non-profit organizations in New Jersey.

      The report is required to include, but need not be limited to, a description of the demand for the program from qualified non-profits and participating banks, the efforts made by the EDA to promote the program, the total amount of loan guarantees approved by the EDA under the program, and an assessment of the effectiveness of the program in meeting the goals of the bill. The EDA is required to submit its report to the Governor and the Legislature, including any recommendations for legislation to improve the effectiveness of the program.