Distressed cities await Christie decision on extending business zones

Urban enterprise zones that allow businesses to charge a reduced sales tax expired in five New Jersey cities Dec. 31, but legislation to renew them for two years still has a chance.

Gov. Chris Christie has until the end of the month to decide whether to sign the measure that would allow the UEZs in Newark, Camden, Trenton, Bridgeton, and Plainfield to continue and make the tax reduction retroactive to Jan. 1.

Established decades ago, the program sought to give an economic boost to struggling communities.

Michael Darcy, the executive director of the New Jersey League of Municipalities, said Tuesday the uncertainty is tough on businesses located in those zones.

“They have to decide whether it may be more advantageous to relocate outside of the zone to an area that offers different benefits for their business,” he said. “If these businesses do relocate, it then imposes a greater tax burden on other businesses and residents within the community as a whole.”

That scenario is more likely to unfold in Camden and Trenton, according to Michael Cerra,  assistant executive director of the New Jersey League of Municipalities.

“Two of these zones sit right on the Delaware,” he said. “And we run the risk that, once losing that designation, some of these businesses might be right across the river to the other side.”

Darcy said he hopes the governor will sign the legislation.

“These are communities that have been designated in need of this special assistance. We think that they need to continue to receive that special urban enterprise designation, and if it needs to change and modernize, that’s fine,” he said. “But let’s figure out how to do that and keep these zones active while we’re figuring out how to do that.”

Christie, who has questioned the effectiveness of the state’s entire urban enterprise zone program, said previously he wants to look into whether a different approach would be more helpful for financially distressed communities.

“Two of these zones sit right on the Delaware, Trenton and Camden, and we run the risk that once losing that designation, some of these businesses might be right across the river to the other side.”