New Jersey Future analysis of the New Jersey Economic Recovery Act of 2020

December 21st, 2020 by Peter Kasabach

There is much for smart growth advocates to like in S3295/A4, the economic incentives legislation passed by the New Jersey Legislature today. The comprehensive package of programs represented in this bill recognizes that place matters and that government subsidies, when directed toward places where we want and need growth, can help achieve a New Jersey in which everyone can thrive. Additionally, virtually all of New Jersey Future’s smart growth recommendations have been incorporated into the legislation.

First and foremost, the suite of programs in this package recognizes the importance and preeminence of the State Development and Redevelopment Plan in assessing where growth should occur in the state. Most of the programs detailed in the bill would prioritize projects that take place in the designated growth areas, and in some cases the growth location is a key eligibility criteria. The additional targeting of federal Opportunity Zones and lower-income communities is another positive feature that will align investments with policy objectives.

The Community-Anchored Development program, the Main Street recovery program, and the entrepreneur zones working group are all evidence that this legislature and administration understand that place-based economic development is critical to the future of our state. Place-based economic development requires careful targeting, comprehensive planning, and a recognition that creating walkable, mixed-use, diverse, equitable places is a cornerstone of economic growth. A crucial inclusion in this bill is the allocation of funding for economic development planning grants for towns to assess their current situation and develop smart, implementable strategies for moving forward.

The state’s first historic tax credit program will help redevelop and revitalize our older downtowns and communities, and will allow smaller and mixed-use projects to participate, which oftentimes form the important fabric of these places.

The brownfields incentive program should be a good complement to the current brownfields clean-up programs at the state, and the other redevelopment incentive programs in the package. The current bill seems to be open to smaller, mixed-use, and residential projects, but the implementing regulations will determine if they can access the program in a feasible manner. Many of our older communities where we want to see growth and redevelopment have been stymied by the existence of contaminated sites and the extra costs that come with needing to clean them up. This is especially true in our environmental justice communities.

The Aspire program (successor to ERG) includes the very important aspect of mixed-income, residential development in targeted locations. This type of housing can be the necessary first step toward transforming downtowns and a precursor for future commercial redevelopment, job creation, and investment. The program also introduces the concept of an infrastructure fund, which is an essential acknowledgement that place-based economic development requires an investment in the infrastructure that surrounds development projects and makes a place attractive and functional for residents and businesses.

Both the Aspire program and the Emerge program (successor to Grow NJ) incorporate a new level of transparent reporting and third-party evaluation. Evaluating whether or not these programs are delivering the intended policy results and are advancing growth and development in the places where they will do the most good is a necessary process to ensure that the significant amount of state deferred revenue is being fully leveraged and well invested.

That the Evergreen program and fund puts the state in the role of investor and partner, rather than just grantor, is a positive. This relationship should allow more innovative and difficult projects to advance. If done well, it should also allow projects to expand their bottom line goals to improve community conditions, include racial and economic equity concerns, and promote more minority inclusion.

A few of the programs incorporate the concept of Community Benefits Agreements. This is an important step toward ensuring that projects don’t just serve the developer or owner, but also the surrounding host community and neighbors. The current language creates a seat at the table for the host municipality and the EDA. We recommend taking a step further to ensure that actual community members that are immediately affected by the project are also at the table. It would be wise to provide a small stipend to these individuals, since otherwise they will be the only people at the table not being paid.

While there is much to like in this long-awaited package, turning it into law is just the first step. The programs outlined are sound frameworks that need to be turned into streamlined, implementable programs that are accessible to a large number of stakeholders, especially those in lower income communities and communities of color. One aspect to note is the large allocation of funding for “transformative projects.” While this has its upside, an unintended consequence is reduced availability of funding for other projects, which may prevent many smaller, catalytic projects, led by smaller developers from advancing. It will also be important to see if the program incentive caps imposed by this legislation will slow growth and stall redevelopment momentum in our urban communities and downtowns where the most opportunity and need exists.

This is a very large and complicated bill that includes many details that are not yet fully researched or understood. It is the kind of bill that would have benefitted from additional time for the public and policymakers to understand the nuances and detailed parameters being imposed by the legislature. However, New Jersey Future does look forward to working with the legislature and administration to move from vision to incentivized projects on the ground.