Bill Text: NJ A3477 | 2010-2011 | Regular Session | Introduced
Bill Title: Authorizes creation of economic recovery districts; authorizes certain economic recovery district management corporations to issue bonds secured by incentive grants.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2010-11-08 - Introduced, Referred to Assembly Commerce and Economic Development Committee [A3477 Detail]
Download: New_Jersey-2010-A3477-Introduced.html
Sponsored by:
Assemblyman CRAIG J. COUGHLIN
District 19 (Middlesex)
SYNOPSIS
Authorizes creation of economic recovery districts; authorizes certain economic recovery district management corporations to issue bonds secured by incentive grants.
CURRENT VERSION OF TEXT
As introduced.
An Act authorizing certain measures to encourage economic development, amending P.L.2009, c.90, and supplementing P.L.1972, c.134.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 4 of P.L.2009, c.90 (C.52:27D-489d) is amended to read as follows:
4. a. The governing body of a municipality wherein is located a qualifying economic redevelopment and growth grant incentive area may adopt an ordinance to establish a local Economic Redevelopment and Growth Grant program for the purpose of encouraging redevelopment projects in that area through the provision of incentive grants to reimburse developers for all or a portion of the project financing gap for such projects. No local Economic Redevelopment and Growth Grant program shall take effect until the Local Finance Board approves the ordinance.
b. A developer that submits an application for a local incentive grant shall indicate on the application whether it is also applying for a State incentive grant. An application by a developer applying for a local incentive grant only shall not require approval by the authority. [A] Except as provided in subsection e. of this section, a municipal redeveloper may only apply for local incentive grants for the construction of: (1) infrastructure improvements in the public right-of-way, or (2) publicly owned facilities.
c. No local incentive grant shall be finally approved by a municipality until approved by the Local Finance Board.
d. In deciding whether or not to approve a local incentive grant agreement the Local Finance Board shall consider the following factors:
(1) the economic feasibility of the redevelopment project;
(2) the extent of economic and related social distress in the municipality and the area to be affected by the redevelopment project;
(3) the degree to which the redevelopment project will advance State, regional, and local development and planning strategies;
(4) the likelihood that the redevelopment project shall, upon completion, be capable of generating new tax revenue in an amount in excess of the amount necessary to reimburse the developer for project costs incurred as provided in the redevelopment incentive grant agreement;
(5) the relationship of the redevelopment project to a comprehensive local development strategy, including other major projects undertaken within the municipality;
(6) the need for the redevelopment incentive grant agreement to the viability of the redevelopment project;
(7) compliance with the provisions of P.L.2009, c.90 (C.52:27D-489a et al.); and
(8) the degree to which the redevelopment project enhances and promotes job creation and economic development.
e. Notwithstanding subsection b. of this section, a local incentive grant may provide assistance to a developer in order to enhance its credit for the purpose of securing private financing, or the grant may provide assistance to the developer or economic recovery district, as defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) as payment or security for bonds or negotiable instruments issued pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.2010, c.10, s.3)
2. Section 10 of P.L.2009, c.90 (C.52:27D-489j) is amended to read as follows:
10. a. The New Jersey Economic Development Authority, or any other State agency, may provide assistance to a developer in order to enhance its credit for the purpose of securing private project financing on more favorable terms.
b. For purposes of this section, "assistance" may include authorizing the use of grant proceeds by a developer or economic recovery district, as defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) as payment or security for bonds or negotiable instruments issued pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.2009, c.90, s.10)
3. Section 12 of P.L.2009, c.90 (C.52:27D-489l) is amended to read as follows:
12. a. A municipality may adopt an ordinance creating a municipal redevelopment utility under the name and style of "the __________ redevelopment utility," with all or any significant part of the name of the municipality inserted. The redevelopment utility shall be a municipal public utility for the purposes of Title 40A of the New Jersey Statutes.
b. The purpose of every redevelopment utility shall be to receive revenues collected pursuant to section 11 of P.L.2009, c.90 (C.52:27D-489k) and to use those revenues as payment of incentive grants, and for other local purposes that may be approved by the Local Finance Board, as that board deems necessary or useful.
c. If a municipality does not create a municipal redevelopment utility, then any revenues collected pursuant to section 11 of P.L.2009, c.90 (C.52:27D-489k) and any grants received to pay incentive grants shall be treated as riders in the municipal budget pursuant to N.J.S.40A:4-36.
d. A municipal redevelopment utility that is designated as a economic recovery district management corporation, as defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall have the authority to issue and assign bonds, pursuant to pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
(cf: P.L.2009, c.90, s.12)
4. (New section) For purposes of P.L. , c. (C. ) (pending before the Legislature as this bill):
"Agreement" means a financial agreement for a payment in lieu of taxes.
"Developer" means a developer as defined in section 3 of P.L.2009, c.90 (C.52:27D-489c).
"Economic recovery district management corporation" means an entity authorized and created by municipal ordinance or incorporated pursuant to Title 15A of the New Jersey Statutes and pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) and designated by municipal ordinance to levy and collect a special assessment within a special improvement district, and may include a municipal redevelopment utility established pursuant to section 12 of P.L.2009, c.90 (C.52:27D-489l).
"Economic recovery district" or "district" means a district designated by a municipality, by ordinance, pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) to promote the economic revitalization of the municipality through the encouragement of a project financed in part by an incentive grant received as part of the Economic Redeveopment and Growth Grant program established pursuant to P.L.2009, c.90 (C.52:27D-489a et al.).
"Improvement" means the purchasing, leasing, condemning, or otherwise acquiring of land or other property, or an interest therein, in the economic recovery district or as necessary for a right-of-way or other easement to or from the district; the relocating and moving of persons displaced by the acquisition of land or property; the rehabilitation and redevelopment of land or property, including demolition, clearance, removal, relocation, renovation, alteration, construction, reconstruction, installation or repair of a building, street, highway, alley, service or other structure or improvement; the acquisition, construction, reconstruction, rehabilitation, or installation of parking and other public facilities and improvements, except buildings and facilities for the general conduct of government and schools; and the costs associated therewith including the costs of an appraisal, economic and environmental analyses or engineering, planning, design, architectural, surveying or other professional services necessary to effectuate the improvement.
"Incentive grant" means an incentive grant as defined in section 3 of P.L.2009, c.90 (C.52:27D-489c).
"Special assessment" means an assessment upon the lands or improvements on such lands, or both, in the economic recovery district benefitted by improvements undertaken pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) that are assessed pursuant to chapter 56 of Title 40 of the Revised Statutes, R.S.40:56-1 et seq. except as otherwise provided in P.L. , c. (C. ) (pending before the Legislature as this bill).
5. (New section) a. A municipality that has adopted or adopts an ordinance authorizing the establishment of a special improvement district pursuant to section 6 of P.L.1972, c.134 (C.40:56-71), and in which there is a redevelopment project receiving assistance from an incentive grant received as part of a State or local Economic Recovery and Growth Grant program established pursuant to P.L.2009, c.90 (C.52:27D-489a et al.), may designate, by ordinance, any portion or all of that district containing the redevelopment project for which a developer is receiving assistance as an economic recovery district. A municipality may create, by separate ordinances, more than one district.
b. The governing body of a municipality creating an economic recovery district pursuant to this section shall establish an economic recovery district management corporation to provide administrative and other services to benefit the businesses, employees, residents, and consumers in the special improvement district. The mayor or other chief executive officer of the municipality shall appoint the economic recovery district management corporation consisting of seven or more persons, at least a majority of whom shall be owners or occupants of properties adjoining a pedestrian mall or included in a special improvement district, as the case may be, or representatives of these owners or occupants, to advise the governing body in connection with the acquisition, construction, and improvement of a pedestrian mall, or the acquisition and construction of improvements for a special improvement district. No economic recovery district management corporation shall receive any funds or exercise any powers pursuant to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), unless the board of directors of that corporation shall include at least one member of the governing body of the municipality.
6. (New section) a. A municipality that has established an economic recovery district pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill) may adopt an ordinance to authorize an economic recovery district management corporation to levy and collect, within the district, a special assessment that shall not exceed the difference between the incentive grant and the debt service for any bonds issued by the economic recovery district management corporation pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill) in a given year. The special assessment shall be levied for the purpose of addressing debt service covering interest or principal, or both, on any bonds issued by the economic recovery district management corporation pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill),
b. The ordinance shall be a valid and binding ordinance of the municipality. The ordinance shall continue in force and effect until repealed by the governing body. The municipality may also provide and covenant by ordinance that the ordinance authorizing the special assessment will not be amended so as to repeal or reduce the special assessment while bonds issued pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill) are outstanding, unless the resolution authorizing the bonds shall provide otherwise. Such covenant shall constitute a valid and legally binding contract between the municipality and bondholders.
7. (New section) a. In addition to the powers granted to a district management corporation pursuant to section 17 of P.L.1984, c.151 (C.40:56-83), an economic recovery district management corporation that is a municipal redevelopment utility, created pursuant to section 12 of P.L.2009, c.90 (C.52:27D-489l) shall have the power to issue negotiable bonds or other obligations secured by an incentive grant received by a project and by a special assessment authorized by ordinance in accordance with section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill). Bonds so issued shall be to provide financing, refinancing, or reimbursement for the cost of the design, construction, establishment, extension, alteration, or acquisition of adequate storm drainage systems, sewers, water systems, roads, bridges, culverts, tunnels, streets, sidewalks, lighting, parking, parks and recreation facilities, libraries, schools, transit facilities, solid waste facilities, convention centers, conference centers, visitors' centers, infrastructure improvements located in or supporting a transit-oriented development, renovation, rehabilitation, and repair of existing buildings, building systems, and components for existing residential condominiums designated as affordable housing and other infrastructure improvements as necessary, whether situated within the special taxing district or outside the economic recovery district if the infrastructure improvement is reasonably related to other improvements within the special taxing district, for the development and utilization of the land, each with respect to any defined geographic region within the economic recovery district.
b. To implement the authority to issue bonds conferred upon the district management corporation by this section, the governing body of the municipality in which the economic recovery district is located shall adopt an ordinance or resolution that:
(1) Specifies and describes the proposed undertaking;
(2) Specifies the maximum principal amount of bonds to be issued; and
(3) Agrees to a covenant to levy upon all real and personal property within the special taxing district special taxes in rate and amount at least sufficient in each year in which any of the bonds are outstanding to provide for the payment of the principal of and the interest on the bonds.
c. The bonds and notes issued by the district management corporation pursuant to this section shall be non-recourse obligations, and shall not be direct and general obligations of the municipality, and the municipality shall not be obligated to levy and collect a tax sufficient in an amount to pay the principal and interest on the bonds and notes when the same become due and payable. The provisions of the "Local Government Supervision Act (1947)," P.L.1947, c.151 (C.52:27BB-1 et seq.) shall not apply to any bonds or other obligations issued or authorized pursuant to this section and those bonds or other obligations shall not be considered gross debt of the municipality on any debt statement filed in accordance with the "Local Bond Law," N.J.S.40A:2-1 et seq., and the provisions of chapter 27 of Title 52 of the Revised Statutes shall not apply to such bonds.
d. The proceeds of any incentive grant or payments in lieu of taxes made by a developer under an agreement authorized pursuant to the Economic Redevelopment and Growth Grant program and special assessments may be assigned directly to the corporation or the trustee for the bonds as payment or security for the bonds. Notwithstanding any law to the contrary, the assignment shall be an absolute assignment of all the municipality's right, title, and interest in the payment in lieu of taxes and special assessments, or portion thereof, along with the rights and remedies provided to the municipality under the agreement including, but not limited to, the right of collection of payments due. Payments in lieu of taxes and special assessments shall not be included in the general funds of the municipality, nor shall they be subject to any laws regarding the receipt, deposit, investment or appropriation of public funds and shall retain such status notwithstanding enforcement of the payment or assessment by the municipality or assignee as provided herein.
e. The proceeds from the sale of the bonds and any funds provided by any department of the State, or by any authority created by the State or bi-state authority, shall not require compliance with public bidding laws, including the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.), or any other statute, when the redeveloper shall undertake any improvements described in subsection a. of this section.
8. (New section) The special assessment levied and collected by the economic recovery district shall be appropriated to any shortfall between the debt service and the incentive grant in a given year. In any year in which a portion of the special assessment collected annually is not appropriated or expended by the district for this purpose, the assessment shall be expended for an improvement in the district as defined in section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
9. (New section) a. The special assessments required to be paid to the economic recovery district management corporation pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be a continuous lien on the land against which the ordinance is recorded on and after the date of recordation of the ordinance. All subsequent assessment payments, interest, penalties, and costs of collection which thereafter fall due or accrue shall be added and relate back to and be a part of the initial lien. Upon recordation of the ordinance and agreement, payments in lieu of taxes shall constitute a municipal lien within the meaning, and for all purposes, of law.
b. If revenue bonds or other obligations are issued by the corporation in order to finance or refinance the construction, reconstruction, repair, alteration, improvement, and development of any infrastructure, or parking or transportation facilities, or work that reduces, abates or prevents environmental pollution, or other improvements that provide a public benefit within or to an economic recovery district in accordance with section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill), the municipality or the redeveloper may record, either simultaneously or at different times, any ordinance adopted by the municipality relating to the payment in lieu of taxes agreement or special assessments and, either simultaneously with the ordinance or at different times, a copy of the agreement or agreements. The ordinance, when recorded, shall contain a legend at the top of the front page substantially as follows:
"THIS ORDINANCE SECURES BONDS OR OTHER OBLIGATIONS ISSUED IN ACCORDANCE WITH THE PROVISIONS OF P.L. , c. (C. ) (pending before the Legislature as this bill) AND THE LIEN HEREOF IN FAVOR OF THE OWNERS OF SUCH BONDS OR OTHER OBLIGATIONS IS A MUNICIPAL LIEN SUPERIOR TO ALL OTHER NON-MUNICIPAL LIENS HEREAFTER RECORDED."
c. Notwithstanding any law to the contrary, upon recordation of both the ordinance and any accompanying agreement and upon the issuance of bonds or other obligations, the lien thereof shall be perfected for all purposes in accordance with law and the lien shall thereafter be superior to all non-municipal liens thereafter recorded or otherwise arising, without any additional notice, recording, filing, continuation filing, or action, until the payment in full of the bonds or other obligations. The lien thereby established shall apply not only to the bonds and other obligations initially issued, but also to any refinancing or refunding thereof, as well as to any additional bonds and other obligations thereafter issued on a parity therewith in accordance with the provisions of the original documents securing the initial bonds and other obligations; provided, however, that in the event any ordinance or agreement is amended or supplemented in a way which increases the amount of payments in lieu of taxes or special assessments, the lien as to that increase shall be perfected and apply upon the recordation of the amended or supplemented ordinance and agreement (including the above-recited legend). Except as set forth in this section, no amendment or supplement to the ordinance or agreement thereafter recorded shall affect the perfection or priority of the lien established upon original recordation thereof.
d. Upon the final payment in full of any bonds or other obligations secured as provided in this section and section 7 of P.L. , c. (C. ), the lien established hereby shall terminate, and the municipality shall record a notice to that effect.
10. This act shall take effect immediately.
STATEMENT
In July 2009, the New Jersey Legislature enacted the "Economic Stimulus Act of 2009," N.J.S.A.52:27D-489a et al., which established the Economic Redevelopment and Growth ("ERG") grant program. The program provides incentive grants to developers that reimburse a portion of taxes generated through new development projects. This bill would supplement and amend the Stimulus Act to authorize municipalities to monetize the income stream provided by the ERG up front, creating a powerful tool to encourage desirable new development.
Under this legislation, a municipality may establish a special improvement district covering an area containing a project that has received a redevelopment incentive grant as part of an ERG program. By ordinance, a special assessment lien levied on the project would secure the project's obligation to cover any shortfall between the incentive grant and debt service on bonds issued by the district utility. In the event that revenues reimbursed to the developer as part of the grant are less than debt service, which would be especially likely in the early years of the project, the special assessment obligation would be triggered kicks in. If the special assessment obligation goes unpaid, a lien on the property superior to other liens is created. Ultimately, lenders have a remedy to recover those shortfall payments through the tax foreclosure process. Under this system, the developer of the redevelopment project assumes the risk of any shortfall in tax increment revenues. As the party solely in position to successfully implement the project, the project developer either benefits from the ERG or suffers the shortfall for failure.
