New Jersey-2024-A2109-Introduced

An Act establishing a pilot program to provide incentives to improve the tax base in certain municipalities and supplementing and amending P.L.1983, c.303.

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

1. (New section) This act shall be known and may be referred to as the "Neighborhood Scholar Revitalization Pilot Program."

2. (New section) The Legislature finds and declares:

a. Urban blight has substantially reduced the taxable value of property in many neighborhoods in New Jersey's older cities, depriving these cities of the ability to raise necessary taxes to support city services.

b. The migration of the middle class from the cities to the suburbs during the latter half of the 20th Century started a cycle of poverty, neglect, and blight that continues to deter reinvestment and resettlement of a middle class in order to reestablish a middle class.

c. A root cause of urban blight is the loss of the municipal tax base. Attempts to revitalize urban areas through redevelopment projects and through the urban enterprise zone program have met moderate success in business districts, but less success within declining residential neighborhoods.

d. A pilot program specifically designed to attract college graduates to targeted areas in certain cities may be a key component to the revitalization of our older cities.

e. It is therefore an appropriate public purpose to establish a pilot program through the Urban Enterprise Zone Authority to provide, as a financial incentive, for the reimbursement of a certain portion of a college graduate's student loans in return for their commitment to move into a targeted residential neighborhood for a period of at least two years.

3. (New section) a. For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill):

"Fund" means the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established pursuant to subsection b. of this section.

"Pilot municipality" means Camden City in Camden County, Trenton City in Mercer County, Jersey City in Hudson County, and Paterson City in Passaic County.

"Pilot program" means the Neighborhood Scholar Revitalization Pilot Program established under subsection c. of this section.

"Qualified participant" means an individual who has been awarded a degree upon graduating from an accredited two- or four-year institution of higher education and who has at least $7,000 of outstanding student loan debt at the time of application for the pilot program.

"Regulated contribution" means a contribution to the fund by a qualified business that receives a tax credit pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), subject to any limits imposed by the authority.

"Targeted residential neighborhood" means a delineated residential area within a pilot municipality designated pursuant to subsection d. of this section.

b. There is created a "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" to be held by the State Treasurer, which shall be the repository for all monies required to be deposited therein in exchange for tax credits granted under section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill), or transferred from the enterprise zone assistance fund pursuant to section 29 of P.L.1983, c.303 (C.52:27H-88).

c. (1) The Urban Enterprise Zone Authority, working in consultation with the Commissioner of Community Affairs, shall establish the Neighborhood Scholar Revitalization Pilot Program with the purpose of offering college graduates with student loan debt a financial inducement, in the way of student loan reimbursement payments, in return for their commitment to relocate into a targeted residential neighborhood for a period of at least 24 months.

(2) The pilot program shall be limited to 200 qualified participants within each of the four pilot municipalities. New qualified participants may be added to replace participants who fail to complete their 24-month commitment period.

(3) Each qualified participant shall enter into a written contract to maintain their principal residence within a dwelling located within a targeted residential neighborhood for a period of at least 24 months. A qualified participant may change residences during the 24-month commitment period, so long as they remain within a targeted residential neighborhood.

(4) At the completion of the 24-month commitment period, each qualified participant shall be entitled to receive from the fund a student loan reimbursement payment of $7,000, representing $3,500 for each 12-month period within the 24-month commitment period. A reimbursement payment received pursuant to this section shall not be included as income for the purpose of taxation under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., or for any income limit required for participation in any State program.

d. (1) Each pilot municipality shall designate targeted residential neighborhoods for approval by the Commissioner of Community Affairs. The commissioner shall approve the designation of a targeted residential neighborhood that is primarily residential in character and located in a census tract in which the median household income is 60 percent or less of the median income for the housing region in which the census tract is located, as determined for a three-person household by the Department of Community Affairs in accordance with the latest federal decennial census. A list of eligible census tracts within the pilot municipalities shall be maintained by the Department of Community Affairs and shall be adjusted upon publication of median income figures by census tract after each federal decennial census.

(2) The Department of Community Affairs shall maintain a list of targeted residential neighborhoods on its Internet website and each pilot municipality shall maintain a list of targeted residential neighborhoods within that municipality on its Internet website.

e. The authority shall work with the New Jersey Housing and Mortgage Finance Authority to develop and offer favorable loan programs to qualified participants seeking to purchase homes within a targeted residential neighborhood.

f. No later than three years after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the authority, in consultation with the Commissioner of Community Affairs, shall prepare and submit a report to the Governor and Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), evaluating the efficacy of the pilot program and making recommendations for its expansion or termination.

g. The authority, in consultation with the Commissioner of Community Affairs, shall promulgate rules and regulations to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. (New section) a. Any business that is located in a pilot municipality that is subject to the provisions of the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), and is actively engaged in the conduct of business from a location within an enterprise zone designated pursuant to P.L.1983, c.303, (C.52:27H-60 et seq.), shall be allowed a neighborhood scholar revitalization tax credit against the amount of tax imposed under the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.) equal to the amount of each annual regulated contribution by the business to the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

b. The tax credit allowed pursuant to this section shall be applied against the taxpayer's corporation business tax liability, but shall not reduce a taxpayer's tax liability under the "Corporation Business Tax Act (1945)," P.L. 1945, c. 162 (C. 54:10A-1 et seq.) in any tax year by more than 50 percent of the amount otherwise due. Any neighborhood scholar revitalization tax credit remaining and unused in a tax year may be carried forward by the taxpayer to the next succeeding tax year and applied against 50 percent of the amount of tax otherwise due in that succeeding tax year.

c. The neighborhood scholar revitalization tax credit shall be allowed in the tax year immediately following the tax year in which the business made an annual regulated contribution to the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall be permitted in any tax year of a 20 year period from the date of the contribution.

5. Section 29 of P.L.1983, c.303, s.29 (C.52:27H-88) is amended to read as follows:

29. a. (1) There is created an enterprise zone assistance fund to be held by the State Treasurer, which shall be the repository for all moneys required to be deposited therein under section 11 of P.L.2021, c.197 (C.52:27H-98). All moneys deposited in the fund shall be held and disbursed in the amounts necessary to fulfill the purposes of this section and subject to the requirements hereinafter prescribed. The State Treasurer may invest and reinvest any moneys in the fund, or any portion thereof, to strengthen capital structures, leverage additional debt capital, and increase lending and investing in economically disadvantaged communities, and in any other manner that advances the goals of the Urban Enterprise Zone program, including, but not limited to legal obligations of the United States or of the State or of any political subdivision thereof or government-sponsored enterprises. Any income from, interest on, or increment to moneys so invested or reinvested shall be included in the fund.

Notwithstanding the provisions of section 11 of P.L.2021, c.197 (C.52:27H-98) or any other provision of law to the contrary, the amount to be deposited in the enterprise zone assistance fund shall be as follows:

(a) In the first five State fiscal years next following the effective date of P.L.2021, c.197, 100 percent of the amount determined pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund;

(b) In the sixth State fiscal year next following the effective date of P.L.2021, c.197, 95 percent of the amount determined pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund and five percent of such amount shall be deposited in the General Fund;

(c) In the seventh State fiscal year next following the effective date of P.L.2021, c.197, 90 percent of the amount determined pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund and 10 percent of such amount shall be deposited in the General Fund;

(d) In the eighth State fiscal year next following the effective date of P.L.2021, c.197, 85 percent of the amount determined pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund and 15 percent of such amount shall be deposited in the General Fund;

(e) In the ninth State fiscal year next following the effective date of P.L.2021, c.197, 80 percent of the amount determined pursuant to section 11 of P P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund and 20 percent of such amount shall be deposited in the General Fund; and

(f) In the 10th State fiscal year next following the effective date of P.L.2021, c.197, 75 percent of the amount determined pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) shall be deposited in the enterprise zone assistance fund and 25 percent of such amount shall be deposited in the General Fund.

(2) The State Treasurer shall maintain separate accounts for each enterprise zone designated under P.L.1983, c.303 (C.52:27H-60 et seq.) that is in good standing with the UEZ Authority in accordance with rules adopted by the UEZ Authority, and one in the authority's name for the administration of the Urban Enterprise Zone program, and for providing grants, including planning grants, investments, loans or other guaranties related to qualified assistance fund expenses. The State Treasurer shall credit to each account an amount of the moneys deposited in the fund determined by a weighted formula that applies 50 percent weight to a zone municipality's number of commercial and industrial parcels as recorded by the municipal tax assessor, its Municipal Revitalization Index Distress Score, as determined by the Department of Community Affairs, and the average number of unemployed persons in the municipality according to data provided by the New Jersey Department of Labor and Workforce Development, and 50 percent weight to the gross taxable sales in the municipality subject to reduced sales tax pursuant to section 21 of P.L.1983, c.303 (C.52:27H-80), as determined by the State Treasurer. The data used in the formula, developed under this section, shall be the most recent data that has been made available by the Department of Community Affairs, the Department of Labor and Workforce Development, and the State Treasurer. When funds are received by a qualifying municipality pursuant to this subsection, the funds shall be placed in a new trust or, for a qualifying municipality that has a trust for an enterprise zone on the effective date of P.L.2021, c.197, in the existing trust. The Division of Local Government Services in the Department of Community Affairs shall promulgate regulations, policies, or procedures as necessary to implement the provisions of this section.

(3) From the amounts allocated to the zone assistance fund in each State fiscal year pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98), there shall be deposited annually to the account in the authority's name, $2,500,000 beginning in State Fiscal Year 2022, for the administration of the Urban Enterprise Zone program, and for providing grants, investments, loans, or other guaranties related to qualified assistance fund expenses. This amount shall be adjusted annually by the percentage change in the 12-month Consumer Price Index from June 30 to July 1.

(4) The State Treasurer shall promulgate the rules and regulations necessary to govern the administration of the fund for the purposes of this section, which shall include, but not be limited to, regulations requiring the establishment of separate bank accounts for funds credited to the enterprise zone account of each municipality from the enterprise zone assistance fund, commonly known as "first generation funds," and funds generated from the repayments of loans to individuals and businesses from the enterprise zone account of each municipality and the proceeds from the sale of properties and equipment acquired through the enterprise zone program, commonly known as "second generation funds," and the review, compilation, and monitoring of second generation fund quarterly reports submitted by each enterprise zone.

Any individual, including an individual who is not directly employed by a municipality, with the authority to administer, allocate or approve the use of zone assistance funds is subject to the "Local Government Ethics Law," P.L.1991, c.29 (C.40A:9-22.1 et seq.), unless the individual is a State employee or a special State officer.

b. (1) The enterprise zone assistance fund shall be used for the purpose of assisting qualifying municipalities in which enterprise zones are designated in undertaking economic development projects in designated enterprise zones by funding qualified assistance fund expenses. However, a municipality shall not appropriate or expend more than 25 percent of the amount annually credited to its enterprise zone assistance fund for public safety purposes, as described pursuant to paragraph (4) of subsection m. of section 3 of P.L.1983, c.303 (C.52:27H-62) or more than 10 percent of the amount annually credited to its enterprise zone assistance fund for administrative expenses.

(2) Amounts from the enterprise zone assistance fund for qualifying municipalities that are qualifying municipalities for the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill) may be transferred to the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) to accomplish the purposes of that law.

c. The governing body of a qualifying municipality in which an enterprise zone is designated and the zone development corporation created or designated by the municipality for that enterprise zone may, by resolution jointly adopted after public hearing, propose to undertake an economic development project in the enterprise zone, and to fund that project from moneys deposited in the enterprise zone assistance fund and credited to the account maintained by the State Treasurer for the enterprise zone.

The proposal so adopted shall set forth a plan for the project and shall include:

(1) A description of the proposed project;

(2) An estimate of the total project costs, and an estimate of the amounts of funding necessary annually from the enterprise zone account;

(3) A statement of any other revenue sources to be used to finance the project;

(4) A statement of the time necessary to complete the project;

(5) A statement of the manner in which the proposed project furthers the municipality's policy and intentions for addressing economic development in the enterprise zone as set forth in the zone development plan approved by the authority; and

(6) A description of the financial and programmatic controls and reporting mechanisms to be used to guarantee that the funds will be spent in accordance with the plan and that the project will accomplish its purpose.

As used in this section, "project" means an activity that satisfies the requirements of a qualified assistance fund expense, as that term is defined in subsection m. of section 3 of P.L.1983, c.303 (C.52:27H-62), and which will lead to the creation of new jobs and increased economic activity within the zone.

d. (Deleted by amendment, P.L.2021, c.197)

e. (Deleted by amendment, P.L.2021, c.197)

f. (Deleted by amendment, P.L.2021, c.197)

g. (Deleted by amendment, P.L.2021, c.197)

h. At the end of a State fiscal year, if a municipality has not encumbered a portion of its allocation, such amount may be carried forward to the next State fiscal year and the State fiscal year thereafter. If at the end of the third State fiscal year any of those unencumbered funds remain, then the funds shall be transferred to the UEZ Authority's account in the enterprise zone assistance fund.

i. At the end of a State fiscal year, if a municipality has not expended or otherwise committed a portion of its encumbered funds, then such amount may be carried forward to the next three succeeding State fiscal years. If at the end of the third State fiscal year any unexpended funds remain, then the funds shall be transferred to the UEZ Authority's account in the enterprise zone assistance fund.

j. At the end of a State fiscal year, the Department of Community Affairs shall review an enterprise zone's expenditures of funds received from the zone assistance fund. If the department finds that an enterprise zone expended such funds in a manner inconsistent with the provisions of P.L.1983, c.303 (C.52:27H-60 et seq.) and P.L.2021, c.197, then the enterprise zone shall repay such funds to the department through the forfeiture of future zone assistance fund disbursements. The department shall withhold future funding from the enterprise zone until the enterprise zone enters into and complies with a corrective action plan developed by the department.

k. If in a State fiscal year the amount allocated to the enterprise zone assistance fund is less than the amount required to be allocated pursuant to section 11 of P.L.2021, c.197 (C.52:27H-98) and paragraph (1) of subsection a. of this section, the Legislature shall appropriate to the enterprise zone assistance fund the amount that was not allocated in such State fiscal year in a succeeding State fiscal year along with the funds required to be allocated in that State fiscal year.

(cf: P.L.2021, c.197, s.10)

6. This act shall take effect immediately.

STATEMENT

This bill entitled the "Neighborhood Scholar Revitalization Pilot Program," is intended to aid in the revitalization of declining neighborhoods in the older cities by "seeding" them with a new middle class. The bill establishes a pilot program in four older cities, one in each region of the State, to try to attract recent college graduates to enter into a two-year commitment to settle within certain targeted residential neighborhoods. The four initial cities that will participate in the pilot program are Camden, Trenton, Jersey City, and Paterson. The cities would be responsible for identifying the targeted residential neighborhoods, although those neighborhoods would have to be primarily residential in character and located in a census tract in which the median household income is 60 percent or less of the median income for the housing region in which the census tract is located, as determined for a three-person household by the Department of Community Affairs in accordance with the latest federal decennial census.

Each of the four cities participating in the pilot program would be eligible to offer up to 200 qualified graduates a financial incentive to agree to maintain their primary residence within a targeted residential neighborhood for a period of at least 24 months. To qualify for participation in the program, a graduate would need a degree from a two- or four-year accredited institution of higher education, and proof of outstanding student loan indebtedness of at least $7,000. At the end of the required residency period, the program participant would be reimbursed a total $7,000 towards their student loan obligations.

This pilot program would be administered by the Urban Enterprise Zone Authority because businesses located within pilot municipalities and an enterprise zone designated pursuant to P.L.1983, c.303, (C.52:27H-60 et seq.) and subject to the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.) would be entitled to receive neighborhood scholar revitalization tax credits for contributions made to the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established by the bill. This would assist UEZ businesses in recruiting highly educated workers by offering the student loan reimbursement program as an additional benefit. Monies from each pilot municipality's urban enterprise zone assistance fund account could be transferred into the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" for the purpose of funding student loan reimbursements.

The bill specifies that the amount of the Corporation Business Tax (CBT) tax credit allowed to a business would be equal to the amount of each annual regulated contribution by the business to the "Neighborhood Scholar Revitalization Student Loan Reimbursement Fund" established pursuant to section 3 of the bill, but limited to 50 percent of the amount of tax otherwise due by the business in a given tax year. The bill provides for the carry-forward of unused tax credits.

At the end of three years, the Urban Enterprise Zone Authority, in consultation with the Commissioner of Community Affairs, would be required to report to the Governor and Legislature on the success of the pilot program, and make recommendations regarding either the expansion or termination of the pilot program.