New Jersey General Assembly Speaker Joseph Roberts Thursday will file a stimulus bill for the state that would eliminate tax increment financing and instead implement a new redevelopment grant program, and allow higher educational institutions to use tax-exempt debt for cash-flow needs.
The Assembly Appropriations Committee is scheduled Thursday to take up the bill, called the New Jersey Economic Stimulus Act of 2009. Sen. Raymond Lesniak, D-Union, is working on similar legislation in the upper chamber, but has yet to file his plan, according to Matthew Reilly, spokesman for the Senate Democratic majority.
The initiative would end revenue allocation district, or RAD, financing, sometimes called TIFs in other states, and replace that mechanism with a new Economic Redevelopment and Growth Grant program. The ERGG would follow the state’s existing Brownfields Site Reimbursement program, which reimburses local governments up to 75% of remediation costs, according to preliminary information on the stimulus act. The state uses revenue generated from redevelopment sites — including sales, corporate, and realty-transfer taxes — to finance the BSR program.
Lawmakers and public officials say RAD financing in New Jersey, under existing law, is a slow and cumbersome process. Since its inception in 2002, there is only one project in the state that is qualified to sell RAD bonds, a big-box retail development in Millville in southern New Jersey. Officials in Bayonne are working on using RAD financing, in part, to convert a 430-acre former naval base into a mixed-use development of housing, office space, retail, and commercial projects.
The bill would also allow the New Jersey Educational Facilities Authority to issue tax-exempt debt on behalf of colleges and universities in need of additional liquidity during the first half of a school year before tuition payments arrive.
Institutions “typically satisfy these needs through bank lines of credit, paying taxable rates,” according to preliminary details on the bill. “The tax-exempt loans that will be available pursuant to the provisions of this act are limited under federal Internal Revenue Service rules as to the amount an institution can borrow and the time permitted for repayment.”
In addition, the stimulus measure would facilitate private investment in dormitories and retail development on college and university campuses to help finance those projects rather than schools borrowing for such improvements.
The bill would also expand the urban transit tax credit program and place a moratorium on the state’s nonresidential development fee, which the Council on Affordable Housing oversees, to help spark commercial development during the current recession.