A4362

An Act establishing a Non-Profit Hospital Redevelopment and Growth Grant program and supplementing chapter 1B of Title 34 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Non-Profit Hospital Redevelopment and Growth Grant Act.”

2. As used in sections 1 through 9 of P.L. , c. (C. ) (pending before the Legislature as this bill):

“Applicant” means a non-profit hospital proposing to enter into a redevelopment incentive grant agreement.

“Authority” means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c. 80 (C.34:1B-4).

“Incentive grant” means reimbursement of all or a portion of the project financing gap of a non-profit hospital redevelopment project through the Non-Profit Hospital Redevelopment and Growth Grant program established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).

“New full-time employee” means a person employed by a non-profit hospital: (1) who shall have entered such employment after the completion of the non-profit hospital redevelopment project; (2) who fills a position that the authority shall have determined (a) is permanent, and (b) did not exist in this State prior to the completion of the non-profit hospital redevelopment project; (3) who works at least a 35 hour week in exchange for consideration, or renders any other standard service generally accepted by custom or practice as full-time employment; and (4) whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

“Non-profit hospital” means a hospital, licensed pursuant to P.L.1971, c.136 (C.27:2H-1 et seq.), within the State that is exempt from federal taxation pursuant to paragraph (3) of subsection c. of section 501 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.501(c)(3)).

“Non-profit hospital redevelopment project” means a specific work or improvement, including lands, buildings, improvements, real and personal property or any interest therein, including lands under water, riparian rights, space rights and air rights, acquired, owned, developed or redeveloped, constructed, reconstructed, rehabilitated or improved, undertaken by a non-profit hospital.

“Project financing gap” means the part of the total non-profit hospital redevelopment project cost, including return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, capital contributed by the non-profit hospital which shall not be less than 20 percent of the total non-profit hospital redevelopment project cost, and investor or financial entity capital or loans for which the non-profit hospital, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources.

“Redevelopment incentive grant agreement” means an agreement between the State Treasurer and the authority and a non-profit hospital under which, in exchange for the proceeds of an incentive grant, the non-profit hospital agrees to undertake a non-profit hospital redevelopment project.

“Withholdings” means the amount withheld by a non-profit hospital from the wages of new full-time employees pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq.

3. The New Jersey Economic Development Authority, in consultation with the State Treasurer, shall establish a Non-Profit Hospital Redevelopment and Growth Grant program for the purpose of encouraging the development or redevelopment of non-profit hospitals within the State, through the provision of incentive grants to reimburse non-profit hospital for certain project financing gap costs.

4. a. In accordance with a redevelopment incentive grant agreement, the State Treasurer shall pay to a non-profit hospital from sums appropriated from the General Fund for purposes of an incentive grant, an amount equal to not more than 75 percent of the withholdings of the non-profit hospital.

b. All administrative costs associated with the incentive grant, including costs associated with the review of incentive grant applications, shall be assessed to the applicant and be retained in the State General Fund by the State Treasurer as an offset against annual incentive grant payments.

5. a. The authority, in consultation with the State Treasurer, shall promulgate an incentive grant application form and procedure for the Non-Profit Hospital Redevelopment and Growth Grant program. A completed incentive grant application shall be submitted to the Chief Executive Officer of the authority, and shall be subject to the approval of the authority, after the review and recommendation of the incentive grant by the chief executive officer, in consultation with the State Treasurer.

b. Through regulation, the authority shall establish standards for non-profit hospital redevelopment projects seeking State incentive grants based on the green building manual prepared by the Commissioner of Community Affairs pursuant to section 1 of P.L.2007, c.132 (C.52:27D-130.6), regarding the use of renewable energy, energy-efficient technology, and non-renewable resources in order to reduce environmental degradation and encourage long-term cost reduction.

c. Within each incentive grant application, a non-profit hospital shall certify information concerning:

(1) the status of control of the entire redevelopment project site;

(2) all required State and federal government permits that have been issued for the redevelopment project, or will be issued pending resolution of financing issues;

(3) local planning and zoning board approvals, as required, for the redevelopment project; and

(4) estimates of the number of new full-time employees projected to be hired by the non-profit hospital after completion of the non-profit hospital redevelopment project, the expected salaries of the new full-time employees, and the assumptions upon which those estimates are made.

d. With regard to the amount equal to not more than 75 percent of the withholdings to be appropriated for an incentive grant, the authority and the State Treasurer shall review the redevelopment project costs, evaluate and validate the project financing gap projected by the non-profit hospital, and conduct a State fiscal impact analysis to ensure that the incentive grant assistance provided to the project will result in a total net benefit to the State.

e. The authority and the State Treasurer may act cooperatively to administer and review applications, and shall consult with the Business Action Center in the Department of State on matters concerning State, regional, and local development and planning strategies.

f. The costs of the aforementioned reviews shall be assessed to the applicant as an application fee pursuant to the provisions of subsection b. of section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

6. a. The authority and the State Treasurer are authorized to enter into a redevelopment incentive grant agreement with a non-profit hospital for any redevelopment project located within the State.

b. The decision whether or not to enter into a redevelopment incentive grant agreement is solely within the discretion of the authority and the State Treasurer, provided that they both agree to enter into the redevelopment incentive grant agreement.

c. The Chief Executive Officer of the authority, in consultation with the State Treasurer shall negotiate the terms and conditions of any redevelopment incentive grant agreement on behalf of the State.

d. The redevelopment incentive grant agreement shall specify the amount of the incentive grant that may be awarded to the non-profit hospital depending on the number and salaries of the new full-time employees, the frequency of payments, and the length of time, which shall not exceed 20 years, during which that reimbursement shall be granted. In no event, shall the amount of the reimbursements under a redevelopment incentive grant agreement with the State exceed 20 percent of the total cost of the non-profit hospital redevelopment project. For the purposes of calculating the total cost of all non-profit hospital redevelopment projects, the cost of infrastructure improvements in the public right-of-way and publicly owned facilities shall not be included.

e. In deciding whether or not to recommend entering into a redevelopment incentive grant agreement and in negotiating a redevelopment agreement with a non-profit hospital, the Chief Executive Officer of the authority shall consider the following factors:

(1) the economic feasibility of the redevelopment project;

(2) the likelihood that the non-profit hospital redevelopment project shall, upon completion, be capable of generating an amount equal to 100 percent of the withholdings that in total are in an amount in excess of the amount necessary to reimburse the non-profit hospital for non-profit hospital redevelopment project costs incurred as provided in the redevelopment incentive grant agreement;

(3) the benefit created by the non-profit hospital redevelopment project to the community where the non-profit hospital is located;

(4) the degree to which the non-profit hospital redevelopment project will advance State, regional and local development and planning strategies;

(5) the need of the redevelopment incentive grant agreement to the viability of the non-profit hospital redevelopment project;

(6) the degree to which the non-profit hospital redevelopment project enhances and promotes job creation and economic development; and

(7) whether the non-profit hospital redevelopment project will create a total net benefit to the State.

7. a. A non-profit hospital that has entered into a redevelopment incentive grant agreement with the authority and the State Treasurer pursuant to section of P.L. ,c. (C. ) (pending before the Legislature as this bill) may, upon notice to and consent of the authority and the State Treasurer, pledge and assign as security or support for any loan or bond, any or all of its right, title and interest in and to such agreement and in the incentive grants payable thereunder, and the right to receive same, along with the rights and remedies provided to the non-profit hospital under such agreement. Any such assignment shall be an absolute assignment for all purposes, including the federal bankruptcy code.

b. Any pledge of incentive grants made by the non-profit hospital shall be valid and binding from the time when the pledge is made and filed in the records of the authority. The incentive grants so pledged and thereafter received by the non-profit hospital shall immediately be subject to the lien of the pledge without any physical delivery thereof or further act, and the lien of any pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the non-profit hospital irrespective of whether the parties have notice thereof. Neither the redevelopment incentive grant agreement nor any other instrument by which a pledge under this section is created need be filed or recorded except with the authority.

8. a. No later than March 1 of each year, for the preceding grant year, each non-profit hospital which has entered into a redevelopment incentive grant agreement under P.L. , c. (C. ) (pending before the Legislature as this bill) shall submit to the authority: (1) a copy of its applicable federal information tax return within 30 days of filing showing business income, and (2) in paper form, a copy of its employer’s quarterly wage and hour reports within 30 days of electronic filing, as a condition of its continuation in the Non-Profit Hospital Redevelopment and Growth Grant program, together with an annual payroll report that it shall prepare showing the new full-time employees hired during each year since the incentive grant was issued and a statement from the non-profit hospital’s chief executive officer or executive director certifying that all employees listed as new full-time employees meet the requirements listed in section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). Should any non-profit hospital which is awarded an incentive grant under P.L. ,c. (C. ) (pending before the Legislature as this bill) fail to submit to the authority a copy of its annual payroll report with the information and certified statement required herein, or submit its annual federal information tax return, or its employer’s quarterly wage and hour reports, any grant payment to be received by any such non-profit hospital shall be forfeited for the applicable reporting year or the next four consecutive calendar quarters, as the case may be, unless the Chief Executive Officer of the authority determines that there are extenuating circumstances excusing the timely filing required herein.

b. The authority may cause an audit of any non-profit hospital receiving an incentive grant to be conducted at any time.

9. The State Treasurer and the New Jersey Economic Development Authority may adopt implementation guidelines or directives, and adopt such administrative rules, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), as are necessary for the implementation of those agencies' respective responsibilities under sections 2 through 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) except that notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) to the contrary, the State Treasurer and the authority may adopt, immediately upon filing with the Office of Administrative Law, such rules and regulations as they deem necessary to implement the provisions of sections 2 through 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) which shall be effective for a period not to exceed 12 months and shall thereafter be amended, adopted, or re-adopted in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).

10. This act shall take effect immediately; however, sections 1 through 8 shall remain inoperative until the first day of the third month next following the date of enactment.

STATEMENT

This bill establishes a Non-Profit Hospital Redevelopment and Growth Grant program (“program”). The program is designed to provide a non-profit hospital with an additional revenue stream, a portion of the income taxes paid by new full-time employees, to facilitate their expansion and redevelopment.

The bill directs the New Jersey Economic Development Authority (“EDA”) to establish the program in consultation with the State Treasurer. Through the program, the EDA may provide a non-profit hospital with a grant from the General Fund of up to 75 percent of the gross income taxes paid by new full-time employees in order to reimburse it for a gap in the financing of a redevelopment project.

The EDA is authorized to negotiate and enter into redevelopment incentive grant agreements with non-profit hospitals at its own discretion, provided the State Treasurer is in agreement. The agreement must specify the amount that may be awarded depending on the projections of the number and salary of new full-time employees, the frequency of the payments and the term for which grant payments will be made, which is not to exceed 20 years. In deciding whether to enter into a redevelopment incentive grant agreement, the authority and the State Treasurer must consider a variety of factors including: (1) the economic feasibility of the project; (2) the likelihood that the grant will cover the financing gap; (3) the non-profit hospital redevelopment project’s benefit to the community; (4) the redevelopment project’s ability to promote job creation and economic growth; and (5) whether the redevelopment project will create a total net benefit to the State.

A non-profit hospital that has entered into a redevelopment incentive grant agreement is provided the right to assign the proceeds of the grant to another entity.

The bill requires that all non-profit hospitals that receive a grant to annually provide the EDA with a copy of its: (1) federal tax filings stating its business income, (2) employer’s quarterly wage and hour reports, (3) an annual payroll report detailing all new full-time employees hired during each year the incentive grant was issued, and (4) a certification by the chief executive officer or executive director of the non-profit hospital that all employees listed in the payroll report meet the requirements of being a new full-time employee. The EDA is also authorized to audit any non-profit hospital that is receiving an incentive grant.