New Jersey-2020-A2290-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, and Jersey City in Hudson 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 subsection g. of section 19 of P.L.1983, c.303 (C.52:27H-78), 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 subsection g. of section 19 of P.L.1983, c.303 (C.52:27H-78), 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 three 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 Council on Affordable Housing 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. Section 19 of P.L.1983, c.303 (C.52:27H-78) is amended to read as follows:

19. Any qualified business subject to the provisions of the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), as actively engaged in the conduct of business from a location within an enterprise zone designated pursuant to this act, which business at that location consists primarily of manufacturing or other business which is not retail sales or warehousing oriented, shall receive an enterprise zone employee 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.), as hereinafter provided:

a. A one-time credit of [$1,500.00] $1,500 for each new full-time, permanent employee employed at that location who is a resident of the qualifying municipality in which the designated enterprise zone is located, or any other qualifying municipality in which an urban enterprise zone is located, and who immediately prior to employment by the taxpayer was unemployed for at least 90 days, or was dependent upon public assistance as the primary source of income;

b. A one-time credit of [$500.00] $500 for each new full-time, permanent employee employed at that location who is a resident of a qualifying municipality in which a designated enterprise zone is located, or any other qualifying municipality in which an urban enterprise zone is located, who does not meet the requirements of subsection a. of this section, and who was not, immediately prior to employment by the taxpayer, employed at a location within the qualifying municipality;

c. A qualified business which is not entitled to an employee tax credit under this section, but meets the eligibility criteria pursuant to the provisions of subsection c. of section 27 of P.L.1983, c.303 (C.52:27H-86), shall receive a one-time credit in an amount equal to [8%] eight percent of each new investment made by the qualified business in the enterprise zone under an agreement approved by the authority.

This credit shall be applied against the taxpayer's corporation business tax liability subject to the limitations and carry forward provisions set forth in section 18 of P.L.1983, c.303 (C.52:27H-77); provided, however, that a qualified business shall not claim an employee tax credit and an investment tax credit authorized pursuant to this subsection in the same year regardless of whether those credits were earned for the tax year or carried forward from a previous year.

d. The enterprise zone employee tax credit shall be allowed in the tax year immediately following the tax year in which the new full-time, permanent employee was first employed by the taxpayer, and shall be permitted in any tax year of a 20 year period from the date of designation of the enterprise zone, or of a period of 20 tax years from the date within that designation period upon which the taxpayer is first subject to the provisions of the "Corporation Business Tax Act (1945)," P.L.1945, c.162 (C.54:10A-1 et seq.), whichever date is later and the termination of the designation of an enterprise zone at the end of a 20 year designation period shall not terminate the eligibility period provided under this section;

e. A tax credit shall be permitted under this section only for those new full-time, permanent employees who have been employed for at least six continuous months by the taxpayer during the tax year for which the tax credit is claimed.

f. A newly employed employee shall not be deemed a new full-time, permanent employee for the purposes of this section unless the total number of full-time, permanent employees, including the newly employed employee, employed by the employer in the zone during the calendar year exceeds the greatest number of full-time, permanent employees employed in the zone by the employer during any prior calendar year during the period commencing with the date of zone designation.

g. Any business entitled to, or that received a credit pursuant to this section, and that is located in a pilot municipality shall be entitled to an additional credit equal to the amount of each 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).

(cf: P.L.1988, c.93, s.4)

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

29. a. 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 21 of P.L.1983, c.303 (C.52:27H-80) or moneys appropriated annually to the fund. 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, in legal obligations of the United States or of the State or of any political subdivision thereof. Any income from, interest on, or increment to moneys so invested or reinvested shall be included in the fund.

The State Treasurer shall maintain separate accounts for each enterprise zone designated under P.L.1983, c.303 (C.52:27H-60 et seq.), and one in the authority's name for the administration of the Urban Enterprise Zone program. The State Treasurer shall credit to each account an amount of the moneys deposited in the fund equal to the amount of revenues collected from the taxation of retail sales made in the zone and appropriated to the enterprise zone assistance fund, or that amount of moneys appropriated to the fund and required to be credited to the enterprise zone account of the qualifying municipality pursuant to section 21 of P.L.1983, c.303 (C.52:27H-80).

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.

(2) Amounts from the enterprise zone assistance fund for qualifying municipalities that are pilot 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 funded by the zone assistance fund through the qualified municipality and implemented by the zone development corporation, which will lead to the creation of new jobs and increased economic activity within the zone, such as: the establishment of revolving loan programs for qualified businesses in the zone to encourage private investment and job creation, and marketing, advertising and special event activities that will lead to increased economic activity or encourage private investment and job creation in the zone, but not including the expenditures therefor which are required to be reported pursuant to "The New Jersey Campaign Contributions and Expenditures Reporting Act," P.L.1973, c.83 (C.19:44A-1 et al.) and the costs associated therewith including the costs of economic analyses.

d. Upon adoption by the governing body of the qualifying municipality and by the zone development corporation, the proposal shall be sent to the authority for its evaluation and approval. The authority shall approve the proposal if it shall find that the proposed project furthers the policy and intentions of the zone development plan approved by the authority, and that the estimated annual payments for the project from the enterprise zone account to which the proposal pertains are not likely to result in a deficit in that account.

e. If the authority shall approve the proposal, it shall annually, upon its receipt of a written statement from the governing body of the qualifying municipality and the zone development corporation, certify to the State Treasurer the amount to be paid in that year from the enterprise zone account in the enterprise zone assistance fund with respect to each approved project. The authority may at any time revoke its approval of a project if it finds that the annual payments made from the enterprise zone assistance fund are not being used as required by this section.

f. Upon certification by the authority of the annual amount to be paid to a qualifying zone with respect to any project, the State Treasurer shall pay in each year to the qualifying municipality from the amounts deposited in the enterprise zone assistance fund the amount so certified, within the limits of the amounts credited to the enterprise zone account of the qualifying municipality.

g. An amount not to exceed one-third of the amount deposited in the account created in the name of the authority in the enterprise zone assistance fund shall be used by the authority for the coordination and administration of the program throughout the State, including but not limited to costs for personnel, operating expenses and marketing. The balance of the remaining amount shall be distributed to qualifying municipalities in proportion to each municipality's contribution to the enterprise zone assistance fund for the coordination and administration of the program within the municipality, including but not limited to costs for personnel, operating expenses and marketing.

(cf: P.L.2018, c.19, s.4)

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 three 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 three initial cities that will participate in the pilot program are Camden, Trenton, and Jersey City. 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 Council on Affordable Housing in accordance with the latest federal decennial census.

Each of the three 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 that already receive tax credits under the urban enterprise zone program would be entitled to receive additional 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 perk. 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.

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.