UEZ reform may have effect on Long Branch

Corzine budget aims to maintain funding, curb fraud and abuse

BY CHRISTINE VARNO Staff Writer

BY CHRISTINE VARNO
Staff Writer

LONG BRANCH — Reform of the state’s Urban Enterprise Zone Program is on the agenda of Gov. John S. Corzine and could affect more than three dozen municipalities across the state, including Long Branch.

In his budget address to the Legislature, Corzine proposed a re-examination of the state’s UEZ program as one of the initiatives aimed at improving revenues.

An examination of the UEZ program would include an audit by the Division of Taxation to uncover and prosecute fraudulent or abusive practices by vendors, according to the budget summary. The study would also evaluate the current 3 percent sales tax rate offered in UEZs, according to a summary of the state budget.

“Right now the governor is proposing to increase the sales tax rate,” said Jacob L. Jones, Long Branch director of Community and Economic Development.

“That would bring the sales tax [rate] from 3 percent up to 3.5 percent,” Jones said. “This is still just in discussion. The governor has not acted on anything yet. We are still safe.”

The UEZ program was enacted in 1983 to revitalize designated urban communities and stimulate their growth by encouraging businesses to develop and create private sector jobs through public and private investment, according to the New Jersey Commerce, Economic Growth and Tourism Commission Web site.

Businesses participating in the UEZ program can access a number of financial programs designed to stimulate job creation and business growth, according to the Web site, including: charging 50 percent of the state’s 6 percent sales tax on certain “in person” purchases; a 100 percent sales tax exemption for purchases of certain materials and tangible personal property; and a one-time corporation tax credit of $1,500 for each new, full-time permanent employee who is a resident of a municipality in which a zone is located and who has been unemployed for at least 90 days or dependent upon public assistance,

As a result of Long Branch’s designation as a UEZ site, qualified businesses are currently eligible to collect sales tax at the reduced rate of 3 percent as opposed to the full rate of 6 percent.

The monies collected at this reduced rate are deposited in the UEZ assistance fund by the New Jersey Division of Taxation and are available for use by the city for programs and projects designated to promote economic development and job creation.

“UEZ promotes economic growth in 37 of the state’s municipalities by allowing a reduced 3 percent sales tax rate and returning to the affected municipalities a portion of the sales tax revenue collected in their zones. In fiscal 2007, it is estimated that $84 million in sales tax revenue will be returned to the zones,” according to the budget summary.

Jones said when Long Branch was first designated a UEZ, “nobody knew the total impact it would have on the city.”

“The program really means a lot to business development in the city. Once money started being put into the project, people said, ‘Boy, this project can save the city all kinds of money,’” Jones said. “But it wasn’t so much about the amount of money, but the ramifications of the use of the money to make improvements.”

Jones added that as a result of money generated from the program, Long Branch has been able to hang banners around the city, put up signage, fix curbing in the city as well as parking lots and hire additional police officers for the UEZ.

“This goes far beyond the dollar,” he said. “It attracts businesses and it brings more people into our business district to support the growth of businesses.”

The UEZ program also allows qualified zone businesses to be exempt from all sales tax on purchases of construction materials and other equipment and supplies, according to the summary.

“Contrary to the program’s goals, these current exemptions have given a disproportionately large financial benefit to a relatively small number of businesses,” the budget summary states.

“As a first step to more precisely target these incentives,” it continues, “the sales tax exemption for qualified businesses would be limited to the purchases of goods and materials related to building, initially equipping, or expanding a commercial structure within the UEZ.”

The changes proposed by Corzine will, “continue to support economic development in the identified areas of the state by maintaining the existing $80 million UEZ municipal revenue stream, which supports critical infrastructure and development. Ending fraud and abuse of the UEZ program will benefit the state by an estimated $100 million in sales tax revenue in fiscal 2007,” according to the summary.

The Long Branch UEZ corporation recently requested funds to support the UEZ Clean Sidewalks project geared toward cleaning the streets in city’s UEZ, according to Jones.

“We are trying to enhance business in the UEZ and the last thing you want are your streets to be covered in trash and litter,” said Jones at the March 28 council meeting. “We really need to clean the area up.”

Council members unanimously approved resolution 112-06, authorizing the city’s UEZ corporation to submit an application to the New Jersey UEZ program for $52,835 for equipment and service costs relative to the UEZ Sidewalks Project.

The council had previously adopted resolution 339-05 in November, approving $32,000.

Resolution 112-06 amends the original resolution to increase the funding and request the application be submitted to the UEZ state authority for approval, Jones said.

According to the resolution, the city will provide a match of $5,600, for a total project amount of $58,435.

The funds will support the purchase of a sidewalk sweeping and cleaning machine, which costs approximately $24,000, according to Jones.

The machine will be used in the city’s UEZ business and commercial zone and the additional funding will be used to pay for labor, operating costs and maintenance, Jones said.