A proposal in the New Jersey Legislature would extend the life of the state’s first five Urban Enterprise Zones for an additional two years. If no action is taken, these zones will expire at the end of the year.
The first UEZs were authorized in the 1986 to promote economic activity in financially-distressed parts of the state. The designation allows local businesses to make tax-free purchases and charge customers half of the state’s sales tax rate.
More than 6,800 businesses statewide participate in the UEZ program, according to the state Department of Community Affairs.
Under the current proposal, UEZs in Bridgeton, Camden, Trenton, Newark, and Plainfield would continue through the end of 2018.
“Our downtown kind of bottomed out back in the late 70s,” said Bridgeton mayor Albert Kelly, a Democrat. “The UEZ was a godsend to allow us to have a competitive advantage with the shopping centers that were going [up] around the city.”
In September Gov. Chris Christie, a Republican, vetoed legislation to extend all 32 UEZs for another ten years, calling the program a “failed 30-year experiment.”
But Assemblyman Reed Gusciora, D-Mercer, who co-sponsored the current proposal, said that cities with UEZs will suffer if the zones are allowed to expire.
“Very simply, businesses would close,” said Gusciora. “They do … attract people from outside the urban areas to shop because you get a cut sales tax rate.”
The bill also directs the state Department of Community Affairs to study the current UEZ program and see if there is a viable alternative that would help distressed cities prosper economically.
The Assembly has already passed the bill. It has been referred to the Senate Economic Growth Committee.