Op-Ed: Help NJ’s Urban Business Base by Extending UEZ Program

Albert B. Kelly | July 25, 2016 | Opinion
There’s legislation on the governor’s desk that can take some of the pressure off cities like Bridgeton, Camden, Trenton, and Plainfield

Bridgeton Mayor Albert B. Kelly
Come December 31, the City of Bridgeton, beyond closing the books on calendar 2016, will no longer be designated as an Urban Enterprise Zone (UEZ) community. Neither will Newark, Camden, Trenton, or Plainfield.

That means that UEZ-certified businesses in these communities who currently take advantage of certain UEZ incentives — such as charging 50 percent sales tax or purchasing certain items tax exempt — can no longer do so after December 31. In Bridgeton it impacts dozens of businesses — as it will hundreds from the other zones.

In one sense, you can argue that this day was always going to come. After all, the program had a start and an expiration with an extension built in along the way. Bridgeton like these other communities was designated as a UEZ community on January 1, 1986, for a 20-year period.

Legislation allowed for a 16- year “one-time” extension that had to be requested in 2000 as per the regulations. This was done and that’s why December 31 means the end of the program for Bridgeton, Newark, Camden, Trenton, and Plainfield.

The other existing zones will be expiring at intervals over the next several years. Bridgeton’s sister cities, Vineland-Millville will expire on September 30, 2019, with newer zone designations coming in the early 2020s. As a mayor of a smaller urban community, it is critical that zone designations set to expire be allowed to extend.

I’m not necessarily arguing for large new incentives — but mainly for an extension. I don’t think this is wholly unreasonable, at least not the way I thought the elimination of the program was in 2011. Prior to 2011, a portion of the sales-tax revenue generated by each community’s certified business base was available for projects in the zones.

But budgets being what they are and with a nasty hole in our state budget, urban communities felt the loss of the program in an acute way. Never mind the fact that we are still coming out of the worst recession since the Depression in the 1930s; a hole is a hole is a hole when it comes to budgets.

But here’s the thing, unlike other regions of the country, many of New Jersey’s urban communities haven’t gotten past the recession. That’s a whole different discussion but the point is that the UEZ program was one way to mitigate the challenges of competing in a fast-changing economic landscape — or surviving in a global economy we’re still trying to wrap our heads around.

Since 2011, several bills have been sponsored to restore aspects of the program — such as a community’s ability to fund zone-based projects — but those bills never got anywhere. Such a thing would be useful because all the challenges remain; but today we have fewer resources to try and meet them.

Now it’s about extending the zone designation so that businesses in urban communities can continue to offer something that lets them compete. As we speak, Assembly Bill A-2576 would extend zone designations for 10 years in addition to providing some resources for zones. Having passed both houses of the Legislature, it awaits action by the governor.

I recognize that the program, like most programs, can’t go on forever unchanged. But the conditions that warranted the program in the first place are either still with us or they’ve morphed into something worse. Admittedly, the chronic nature of the struggles facing urban communities gets shaped by many forces and there are no magic bullets.

So it takes a varied and diverse tool kit to deal with “chronic,” and Bridgeton, along with Newark, Camden, Trenton, and Plainfield with the other zones to follow — will lose an important tool if A-2576 is not signed into law.

The UEZ program may well need to reflect whatever the “new normal” is in the second decade of the 21st century. But revising and revamping certain aspects of the program is a different discussion altogether- for now it’s all about keeping what has been an important and valuable program for New Jersey’s urban business base intact.

That’s why I, along with my fellow mayors and many in the business community I’ve spoken with over the past several months are urging Gov. Chris Christie to sign A-2576 to extend zone designations for 10 years.

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