To me, one of the kickers of this request, from Newark’s West Ward councilman, is the last line directed at Gov. Chris Christie: “In this instance, please be pro-business.” – promoted by Rosi
The recommendations of the Governor’s task force to eliminate the Urban Enterprise Zone program (UEZ) is ill-timed at best and potentially disastrous to small business survival, stabilization and growth in urban areas like Newark at the worst. When President Obama is providing small businesses with help via tax credits to spur hiring and other incentives for technology and investments in our national economy, the state of New Jersey could potentially strike a blow against small businesses for short term budget in urban areas that are barely holding on.
Urban areas, like Newark, have a hard enough time encouraging, supporting, and working collaboratively to develop small businesses in robust economic times for many reasons: access to capital, technical training, staying afloat during that critical first two years, and the fighting the negative ( and some would say racially prejudicial/inaccurate) perceptions of crime and safety. In harsh economic times, the UEZ is not only helping to sustain small businesses, but also the jobs they provide. The UEZ program has created real opportunities in places like Newark, Jersey City, Bayonne, Trenton, Rahway, etc. and an understanding of its history and real results will clarify these facts separate and apart from short term and myopic opinions that do not take into account the total impact and provisions of the program.
The UEZ program was enacted in 1983 with a duration of 20 years. The program has worked so well that….
A look at the benefits to businesses, after the jump.
The program has worked so well that….
it has been extended. A city which has suffered economic problems and meets certain other criteria may request that the Urban Enterprise Zone Authority designate part of the city, usually about 30%, as an Urban Enterprise Zone. It rewards businesses that hire local residents, a requirement for participation, especially low-income residents. The benefits for certified, participating businesses are many:
• Sales tax reduction to customers. Qualified retail businesses may charge 50% of the mandated 7% NJ sales tax on certain “in person” purchases. Revenues generated from the 3.5% sales tax are maintained in a Zone Assistance Fund (ZAF) and are dedicated to use in the zone for certain economic development and/or public service improvement projects;
• Pay no or reduced state sales tax on tangible personal property, materials and equipment. Tangible personal property includes items such as office supplies, office or business equipment, office and store furnishings, trade fixtures, cash registers, etc;
• Pay no or reduced state sales tax on services. Services include items such as installing, maintaining or repairing tangible personal property used in business, maintaining, servicing or repairing real property used in business and advertising services;
• A one-time corporation tax credit of $1,500 for the full-time hiring of each disadvantaged Newark resident, i.e. those who have been unemployed or dependent upon public assistance for at least 90 days, or
• Corporation tax credit of $500 for hiring a non-disadvantaged Newark resident;
• Subsidized unemployment insurance costs, for certain new employees;
• An eligible firm may receive an incentive tax credit of 8% of investment in the Zone by an approved “in lieu” agreement;
• Priority for financial assistance from New Jersey Local Development Financing Fund (LDFF) and Job Training Program.
• Businesses involved in urban redevelopment may be eligible for low- and no-interest loans, loan guarantees, equity investments, and technical assistance. These services are available through the New Jersey Redevelopment Authority and the New Jersey Economic Development Authority.
• Loans, loan guarantees, equity investments, and technical assistance may be available to finance investments in neighborhood-based redevelopment projects, small business lending, renovation, relocation, and/or real estate development in urban areas. These services are available through the New Jersey Redevelopment Authority and the New Jersey Economic Development Authority’s Financing Assistance
• Possible State regulatory relief by Zone request; and
• New Jersey may be able to work with you to leverage your resources to formulate redevelopment projects. This program is administered by the New Jersey Redevelopment Authority to name a few.
In Newark, especially in my ward, the city’s UEZ program will provide loans and grants to small businesses on South Orange Avenue for major façade improvements, new trees, sidewalk repairs, lighting and benching. This is the beginning of small business empowerment that has helped us create a South Orange Avenue Merchants’ Association that we hope to have graduate to a full fledged business improvement district (BID) in the next two years. The UEZ is helping us as we move to increase security, cleanliness, and infrastructure to bring this avenue to its former economic glory for my residents and allow us to compete with South Orange for businesses that appeal to students at Seton Hall University. In short, the elimination of the UEZ program puts my efforts and that of the city back years when we are positioning ourselves to grow and compete as the recovery starts to nationally take foot this and next year. My hope is that our Governor review this report, study its contents and reject its findings due to its failure to take into account the whole truth, not the convenient fall backs. Our present and future depend on it. In this instance, please be pro-business.