M E M O R A N D U M

TO:                      Members of the New Jersey Senate 

FROM:               Hilary Chebra, Manager, Government Affairs CCSNJ

RE:                      Support of S-3295 (Ruiz/Sarlo)

DATE:                 December 21, 2020

The Chamber of Commerce Southern New Jersey (CCSNJ) appreciates the opportunity to share our thoughts on S-3295 (Ruiz/Sarlo), the "New Jersey Economic Recovery Act of 2020" which provides for new economic development tax incentive programs.

The CCSNJ commends Governor Murphy, Senate President Sweeney, Assembly Speaker Coughlin and all involved in the development of these programs. There is much to laud in this legislation, particularly several programs that are well suited to help a diverse array of businesses by way of industry type and size, as well as geographic considerations regarding where projects can be located.

The need for incentives in our state, which is among the most expensive places do business, is undeniable and particularly essential to aid a robust post-pandemic economic recovery. The CCSNJ is uniquely positioned to speak on this topic having witnessed the previous New Jersey Economic Development Authority’s (NJEDA) tax incentive programs, including the Grow New Jersey Assistance Program and the Economic Redevelopment and Growth (ERG) Program, play a crucial role the region’s economic growth over the past decade.

New Jersey’s long-time reputation as an unfriendly and costly place to do business is more worrisome than ever given how mobile businesses have become over recent years. This is worsened by the impending $15 minimum wage rate, a paid sick leave mandate on employers, the recent expansion of New Jersey’s Paid Family Leave Act, and a restrictive and confusing equal pay mandate among others. These mandates are exacerbated by the fact that New Jersey has the highest property taxes in the nation, highest Corporation Business Tax (CBT) in the nation, the second highest top marginal personal income tax rate in the nation and a slew of other taxes and fees that add greatly to the cost of doing business.

The need for incentives has never been greater and the CCSNJ is proud to support S-3295 (Ruiz/Sarlo). In particular, the following measures within the legislation are worth noting.

Transformative Projects 

Of the total $11.5 billion included in the bill, $2.5 billion will be reserved for transformative projects approved under the NJ Aspire Program or the Emerge Program. As currently written, the total value of tax credits awarded for transformative projects in a given year will not be subject to an annual limitation, except that no more than 10 projects can be awarded tax credits during a six-year period and that the total value of credits awarded to any transformative project will not exceed $250 million.

Under the bill, a transformative project is an income producing, non-residential property whose rehabilitation the NJEDA determines will generate a substantial long-term increase in state revenues through the creation of increased business activity within the surrounding area.

The CCSNJ commends the inclusion of “transformational projects” in this legislation. It is imperative for the economic recovery of the state that there are valuable attraction tools to incentivize businesses to invest in New Jersey regardless of the overall business climate and this provision assures that is the case.

Emerge Program and the New Jersey Aspire Program

The CCSNJ supports the $1.1 billion for the successor to Grow New Jersey, the Emerge Program, and the successor to the ERG program, the New Jersey Aspire program. The Emerge Program was established to encourage economic development, job creation, and the retention of significant numbers of jobs in imminent danger of leaving the State, while the New Jersey Aspire Program was created to encourage redevelopment projects by covering certain project financing gap costs.

The predecessors of the Emerge and Aspire programs attracted companies that not only brought capital investment that has vastly improved the landscape of New Jersey, but in South Jersey attracted more economic development resources to the cities of Atlantic City, Camden and the Cumberland County area in South Jersey. Due to the pandemic, many businesses have adapted and changed how they operate.  With businesses being more mobile than ever it is imperative that all efforts are made to make New Jersey competitive for businesses to come and stay. Ensuring that New Jersey is a competitive option to attract and retain operations is vital to recovery the economy and the continued economic growth in New Jersey.

New Jersey Community-Anchored Development Program

The New Jersey Community-Anchored Development Act provides tax credits to anchor institutions to incentivize the expansion of targeted industries and areas in the State. As written, the total value of tax credits annually awarded during the six-year period cannot exceed $200 million. There is an important exception - during each of the first three years of the six-year period the NJEDA can annually award tax credits geographically. Specially, up to $130 million are to be allocated for projects in the 13 northern counties of the State, while a $70 million for projects will be allocated to the eight southern counties of the State, which include the seven most southern counties that the CCSNJ represents.

The inclusion of the New Jersey Community-Anchored Development Program will encourage institutions, such as Rowan University in South Jersey, to continue their incredible economic growth. The CCSNJ appreciates the Legislature putting an emphasis on the geographic diversity of the overall tax incentive spend in this legislation.

Food Desert Relief Program 

The CCSNJ lauds the creation of the Food Desert Relief Program, which requires the NJEDA to provide tax credits, grants, and loans to the first supermarket or grocery store that opens in a food desert community, not to exceed $40 million over a six-year period.

There are areas of the State known as "food desert" communities – including Camden City – where the residents are unable to obtain reasonable and adequate access to nutritious foods, fresh fruits and vegetables. The CCSNJ commends the development of this program that aims to provide financial assistance to food retailers looking to locate in the communities that need it most.

Small Business Incentive Programs

The bill provides for a number of innovative small business programs:

• The "Main Street Recovery Finance Program Act" providing grants, loans, and loan guarantees to small businesses.
• The “Brownfields Redevelopment Incentive Program Act" providing tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs. For tax credits awarded under the "Brownfield Redevelopment Incentive Program Act, the total value of tax credits annually awarded during the six-year period shall not exceed $50 million the
• The “New Jersey Innovation Evergreen Act" auctioning tax credits for cash, which will be used to invest in innovation as a catalyst for economic growth and to advance the competitiveness of the State’s businesses in the global economy. The value of tax credits annually awarded during the six-year period shall not exceed $60 million.
• The “Historic Property Reinvestment Act” providing tax credits for part of the cost of rehabilitating historic properties in this State. The total value of tax credits annually awarded during the six-year period shall not exceed $50 million

Though this bill proposes several programs with the potential to improve New Jersey’s economic outlook, it could go further to help small businesses. Small businesses that were hit hardest during the pandemic are still in need of vital assistance. Although the $50 million appropriated to the Main Street Recovery Fund is appreciated, it is not likely to meet the needs of the struggling small business community that would like to take advantage of the program in the coming months. We respectfully request the Legislature to consider further measures to aid the state’s most vulnerable businesses as the pandemic continues to impact overall economic activity in the state.

Oversight & Accountability Measures

The CCSNJ supports the additional oversight, accountability and consistency measures included in this bill.  However, we caution that such oversight by state government should not add to the administrative burdens on the employer community in order to remain eligible and comply with program requirements. Although the CCSNJ appreciates that the newly developed programs require a certain level of scrutiny, we respectfully warn against making the programs so difficult to comply with that businesses are deterred from pursuing them.

The CCSNJ appreciates the opportunity to share our thoughts on this bill that is critical to the economic recovery of New Jersey following the pandemic. We look forward to an ongoing dialogue with the Legislature and the Administration about these proposals and are optimistic about the path forward as presented in S-3295 (Ruiz/Sarlo).