Lesniak: 'Premature' to expand ERG incentives
The elements of a proposed addition to the Economic Redevelopment and Growth grant program began to become clearer in late May, but its chances of advancing this month went down. Assemblyman Albert Coutinho (D-Newark) has advocated expanding the program to benefit a wider range of businesses, including vacant office and industrial sites.
ERG grants are used to finance projects through future tax revenue, referred to as tax increment financing.
A development lobbyist said the revision could raise the portion of project costs that could be financed through the program from a maximum of 20 percent to as much as 35 percent. This would be accomplished by giving bonus points for proposals that meet certain criteria, including projects in economically distressed areas with high unemployment and supermarkets in areas in need of them.
While development advocates are eager to see action on the measure, it may take longer than they initially hoped.
While Coutinho, the Assembly Commerce and Economic Development Committee chairman, has been an advocate for an ERG upgrade, it has been met by a cooler response by his Senate counterpart, Raymond J. Lesniak (D-Union), who chairs the Economic Growth Committee.
"I think it's premature right now to do that," Lesniak said of the ERG change. "I think that's something we need to look more at and do — if necessary — in the fall."
Development advocates are supportive of the additional credit that would raise ERG financing to 35 percent of project costs, but another hurdle remains in place — the source of tax revenue that will fund these projects, such as income and corporation business taxes. Gov. Chris Christie's office has shown no indication of signing off on the inclusion of new revenue sources — like realty transfer fees — into ERG.
While retail projects are in a strong position to pay off ERG grants through sales tax receipts, office and industrial projects must rely on other state taxes. Development advocates plan to continue to fine-tune the proposal this summer, which may give them more time to get Lesniak to sign off on the measure.
Seeking quick action on $1B boost to Urban Transit credits
While Lesniak is cool on the near-term prospects of expanding ERG, he anticipates action soon on another incentive program — the Urban Transit Hub tax credit program.
Lesniak supports a $1 billion increase in available credits, lifting the cap on both residential and commercial development.
Economic Development Authority officials are studying the program, and plan to submit a report on its status in September, but Lesniak said the need to revise the program is immediate — particularly the residential component, which was frozen this spring after the amount set aside for such projects reached its cap.
Grow New Jersey, a separate incentive program with funding carved out of the transit hub credits, also is nearing its cap. Lesniak said it may need additional funding, but the issue isn't as urgent as the transit hub program.
"There's no doubt that it's close, but we do know that, with regards to the residential component of urban hub, there are a half dozen or more very substantial economic development projects" that would advance if the cap was lifted, Lesniak said.
While Lesniak wants to see immediate action on the issue, he expressed doubt that the Legislature would be able to wrap it up before it enters its recess later this month.
LLC revision makes state more competitive, advocate says
A bill advancing in the Legislature that revises its laws affecting limited liability companies will make New Jersey more competitive with its neighbors, according to an advocate for the bill.
Gianfranco Pietrafesa, a partner in the corporate law department at Haddonfield-based Archer & Greiner P.C., said the legislation comes out of years of study by the business law section of the New Jersey State Bar Association.
"You can organize your company someplace else that provided you the relief that was not available in New Jersey," Pietrafesa said.
Corporate law attorneys have been lobbying legislators for months over the issue, including trips to the Red Tape Review Commission.
The revisions are intended to address several weaknesses in the current law. They include the ability of original LLC owners to force other owners to buy out their interest if they decide to withdraw — with the change, an owner that withdraws would continue to own an interest. "This will definitely help the owners of small LLCs," he said.
Another change allows LLC minority owners to seek redress in court, like minority partners can in other corporations. The changes also make it easier to convert corporations or partnerships into LLCs, and to move LLCs from other states. Under current law, a new LLC must be formed and the existing business merged with it, Pietrafesa said.
"New Jersey's LLC law is 20 years old, and it need a major face lift," he said. "This is exactly what it needs."
New Jersey's smaller neighbor to the south has benefited from its business-friendly LLC laws, Pietrafesa said. "That's why Delaware is where everyone wants to form its businesses — this definitely will help New Jersey be competitive in attracting businesses to the state."