Fostering community economic development in our urban areas is essential to strengthening New Jersey’s economy.
The New Jersey Economic Development Authority (EDA) has long been a valuable and effective resource to help municipalities generate local business growth, carry out important redevelopment projects, and investigate and remediate environmentally contaminated and underutilized properties. Now the EDA has introduced a new predevelopment funding tool to help communities advance commercial real estate projects that are integral to neighborhood revitalization.
Funding for Municipalities The new funding—up to $50,000 per project—can be accessed by municipalities to finance feasibility studies and other predevelopment costs associated with their redevelopment efforts, including planning and marketing expenses. These funds were previously available only to community development organizations.
Expanding the uses of these predevelopment monies to include planning and marketing will provide the funding necessary to move a project to the next stage of redevelopment. The funds can be particularly useful in cases where a municipality may be looking to redevelop a brownfields site and bring an underutilized or vacant property back to productive use. Often such a project can stall, after brownfields investigation and remediation, due to a lack of planning and marketing funds to support redevelopment. This new funding can help take the project to the next level.
The assistance would be repaid through the proceeds of the sale of the project site, or three years from the date of funding, whichever is later. Repayment would not be required if the project is not feasible.
Jobs for Urban Communities The new predevelopment funding is consistent with Governor Corzine’s Economic Growth Strategy to stimulate investment in the state’s urban communities. In conjunction with this strategy, the EDA has created the New Jersey Urban Fund to provide businesses and community development organizations with a comprehensive set of financial and technical resources to grow and revitalize neighborhoods and create jobs.
Fostering community economic development in our urban areas is essential to strengthening New Jersey’s economy. The New Jersey Urban Fund will help carry out Governor Corzine’s strategy for economic growth by attracting and leveraging capital to re-energize our cities and support a broad scope of business and community development needs ranging from entrepreneurial support to brownfields cleanup and remediation.
The EDA launched the initiative by making a $185-million commitment, which will be leveraged with investments from private sources. This combined pool of money will be used to spur business creation and expansion and the physical improvement of New Jersey’s distressed areas.
The fund addresses the need to provide capital to underserved urban areas, create wealth in these communities and improve financial and banking services. It will deploy money directly into projects through debt and equity, and indirectly through nonprofit and for-profit intermediaries.
Fund Offers Varied Resources The fund will focus on capital, real estate development services, technical assistance, investments in intermediaries, and tax incentives and subsidies. It will target four groups: (1)small, minority-owned and woman-owned businesses; (2)medium and large businesses, including manufacturers; (3)large-scale commercial and mixed-use developers; and (4)nonprofit community development corporations.
The fund will make investments in intermediaries such as financial institutions and venture capital organizations to support their community development-related lending and investment activities. Additionally, it will offer business planning assistance and access to professional services to enable entrepreneurs to survive and grow.
The fund also will make available real estate services, including assembling land parcels, conducting brownfield testing and remediation, demolishing buildings and carrying out other predevelopment activities to further support employment-intensive business development.
Three tools—direct capital investments, leveraging investments in real estate investment trusts and real estate development—will be used to encourage large-scale commercial and mixed-use development, especially on brownfield sites.
Nonprofit corporations are increasingly effective facilitators and developers in distressed areas, often leading community efforts to promote neighborhood growth and revitalization. The fund will provide flexible financing, investments and technical assistance to increase the capacity of community development organizations to effect positive change. It also will offer technical assistance in the areas of planning, deal structuring, financing and real estate development management.
EDA Advances Key Projects A variety of EDA resources were catalysts for important redevelopment activities in many New Jersey municipalities in 2006. For example:
Low-interest financing totaling $22.5 million, obtained through the New Markets Tax Credits Program, is being used to help develop a 500,000-square-foot shopping center in Millville. Approximately 25 tenants are expected to occupy the site—which had been vacant and underutilized—including Target, Kohl’s, PetSmart, ShopRite, Staples and Circuit City.
A $750,000 EDA loan will fund a portion of the remediation costs associated with a plan to redevelop a former Curtiss-Wright Corporation manufacturing facility into a mixed-use project known as Wesmont Station in Wood-Ridge. The development will include residential and commercial space and a new train station on New Jersey Transit’s commuter rail line.
The redevelopment of a 37-story former office building in downtown Newark, resulting in the city’s first market-rate apartments in 40 years, was made possible with $7.9 million in EDA bonds and the first-time implementation of a creative financing vehicle known as the Redevelopment Area Bond Financing Law (RAB). The law was enacted in 2002 with the strong support of the New Jersey State League of Municipalities and is designed to help municipalities attract new development and ratables into their communities.
The Borough of Somerville received nearly $300,000 under the Hazardous Discharge Site Remediation Loan and Grant Program for a remedial investigation of a former sanitary landfill. The borough hopes to redevelop the site for commercial re-use.
To Learn More
To learn more about any of the EDA programs or services to assist municipalities, visit the state’s new business website portal, www.nj.gov.com
, the EDA’s website, www.njeda.com, or call the EDA at (609) 777-4898. We would like to talk to you about your needs and how the EDA can help you meet them.
Article published in New Jersey Municipalities Magazine, March 2007