The director of the Long Branch Urban Enterprise Zone (UEZ) said last week that although the state has cut funding to the program, he expects the UEZ to continue supporting local businesses into the future.
“I plan on continuing the program,” Jacob Jones said. “I’m going to try to stretch [remaining state] funds out for another two years, which means we have to cut back on some of our new projects. “We have to be very wise on how we spend.”
Jones, the city’s director of the Office of Community and Economic Development, said he expects to receive a check for approximately $300,000 in November from the UEZ pool of money allocated two years ago.
He said the funds allocated last year and this year did not fund UEZ projects but were sent immediately to the state’s treasury. He also said in an interview Oct. 21 that he’d like to use the funds to keep the program going by offering loans to qualified small businesses in the city.
“I would love to create second-generation funds, if possible, that will help sustain the program beyond the two years [of remaining funding],” Jones said.
Even with the program’s uncertain future, businesses are still able to be certified by the UEZ and benefit from the special 3.5 percent sales tax rate.
Jones said that his department is still actively soliciting businesses to certify and that he’s seen the numbers increase.
“The program will go on; it’s not the end of the UEZ, and I think our certifications are up,” he said. “We are still certifying businesses.”
He said that his office will have enough funding to operate for the short term.
“I am assuming the program will not end, and I think in some way down the road we may get funding again,” he said. “In the meantime we will have funds to operate for another year or two.”
Earlier this year Gov. Chris Christie announced that the state’s UEZ program would no longer be funded as of June 30. In 2010 the state eliminated the individual accounts that the state’s 32 UEZ zones had set up, as well as imposing a $46 million cap on how much money would be disbursed to the zones during the year.
The UEZ program, part of the Department of Community Affairs, allows businesses that certify in the designated zones to charge a reduced sales tax rate — 3.5 percent rather than the statewide 7 percent.
The collected monies from the sales tax previously went into a UEZ fund from which the designated zones drew to pay for projects, events, infrastructure and special police officers.
Jones predicts that if the program were funded again, the scope would be changed.
He said that for the time being the UEZ zones would receive the remaining state funds but would not receive additional monies.
Lisa Ryan, public information officer for the DCA, confirmed in an email that the UEZs would receive the state funds in November and that the certified businesses would continue to benefit from the program, but the programs no longer would be eligible for funds for projects.
Ryan said that the state has developed simplified ways for businesses to certify with the program.
“Changes were made this year to simplify UEZ businesses’ access to the program’s tax benefits, including the introduction of a business-friendly online registration and reporting system and the elimination of cumbersome bureaucracy at the state UEZ authority level,” she said in the email.
In the past, Jones and other UEZ directors have demonstrated at the Statehouse to advocate for continued funding of the program, but he said that there are no plans to continue that outreach.
“We understand that there are some senators that are still proposing laws or bills to amend the UEZ program,” Jones said.
“We’ll just have to see what develops. In the meantime to stage any type of protest to Trenton to keep the UEZ alive is [pointless] at this time.”
Christie’s office released a report Feb. 25 recommending that the Legislature eliminate the statewide program.
According to the report, studies show that only 8 cents in state and local revenue was generated per $1 in state investment in the UEZs; an average of $34 million in the UEZ fund is left unused each year; and less than 5 percent of the investment was spent on construction, expansion and renovation.
The study estimated that eliminating the program would save about $100 million annually in state funds.
The report suggested creating a new program in which all current UEZ towns would be eligible for inclusion. The new program would potentially offer tax credits for capital improvements; support a revolving loan fund aimed at business development and job creation; and create a performance metric that would create accountability within the program.
Christie announced on March 28 that he had vetoed $45,700 of the city’s UEZ proposal, including $14,000 for promotional items at conventions, expositions and conferences for giveaway items like pens, and $15,750 for videography services for recording car shows, cruise nights and concerts.
The Long Branch UEZ has spent nearly $6 million since 1994 on projects that have included improving parks and building facades, resurfacing roads, supporting redevelopment and purchasing police vehicles, according to Jones.
Jones previously has said that the city zone operates on about $500,000 a year in funding.
From an initial 10 zones in 1984, the program has grown to 32 zones in 37 municipalities throughout the state. Long Branch and neighboring Asbury Park share a joint zone.
Contact Kenny Walter at [email protected].