Sponsored by:
Senator ANDREW ZWICKER
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
Senator NILSA I. CRUZ-PEREZ
District 5 (Camden and Gloucester)
Assemblywoman ANNETTE QUIJANO
District 20 (Union)
Co-Sponsored by:
Senators Ruiz, Singleton, Turner, Assemblyman Coughlin and Assemblywoman Reynolds-Jackson
SYNOPSIS
Modifies certain provisions of "New Jersey Innovation Evergreen Act" and "Food Desert Relief Act."
CURRENT VERSION OF TEXT
As reported by the Senate Economic Growth Committee on June 8, 2023, with amendments.
An Act concerning the "New Jersey Innovation Evergreen Act" 1and the "Food Desert Relief Act"1 and amending P.L.2020, c.156.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 21 of P.L.2020, c.156 (C.34:1B-289) is amended to read as follows:
21. As used in sections 20 through 34 of P.L.2020, c.156 (C.34:1B-288 through C.34:1B-302):
"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"Follow-on investment" means a subsequent investment made by an investor who has a previous investment in a New Jersey high-growth business.
1["Full-time employee" means a person employed by a business for consideration for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice, as determined by the authority, as full-time employment.
"Full-time employee filling a position in the State" means a full-time employee having a primary office in the State and spending at least 60 percent of the employee’s work hours at that primary office.]1
"Fund" means the "New Jersey Innovation Evergreen Fund" established by section 23 of P.L.2020, c.156 (C.34:1B-291).
"High-growth business" means a business that is growing significantly faster than the average growth rate of the economy or is a start-up company that is investing in developing a product or new business model that will allow it to grow significantly faster than the average growth rate of the economy within the next three to five years.
"Incentive area" means an area in this State: (1) designated pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et seq.), as Planning Area 1 (Metropolitan); or (2) that has been designated as a qualified opportunity zone pursuant to 26 U.S.C. s.1400Z-1.
"Innovation ecosystem" means funding, programs, and events that support the establishment and expansion of high-growth companies in targeted sectors. Examples of such funding, programs, and events include: mentoring programs for start-ups, meet-up or networking events, funding for locating a business in a collaborative workspace, programs that provide business services, and entrepreneurial education to companies.
"Opportunity zone" means a federal population census tract in this State that was eligible to be designated as a qualified opportunity zone pursuant to 26 U.S.C. s.1400Z-1 as may be amended.
"Principal business operations" means any of the following: (1) at least 50 percent of the business's employees [, who are] not primarily engaged in retail sales [,] reside in the State [, or] ; (2) at least 50 percent of the business's payroll for employees not primarily engaged in retail sales is paid to individuals living in [this] the State; (3) at least 50 percent of the business’s full-time employees not primarily engaged in retail sales are filling a position in the State; or (4) at least 50 percent of the business’s payroll for employees not primarily engaged in retail sales is paid to full-time employees filling a position in the State.
"Program" means the New Jersey Innovation Evergreen Program established by section 22 of P.L.2020, c.156 (C.34:1B-290).
"Purchaser" means an entity registered to do business in this State with the Director of the Division of Revenue and Enterprise Services in the Department of the Treasury that purchases an allocation of tax credits under the program.
"Qualified business" means a business that, at the time of the first qualified investment in the business and throughout the period of the qualified investment under the program, is registered to do business in this State with the Director of the Division of Revenue and Enterprise Services in the Department of the Treasury; has its principal business operations located in the State and intends to maintain its principal business operations in the State after receiving a qualified investment under the program; is engaged in a targeted industry; and employs fewer than 250 persons at the time of the qualified investment.
"Qualified investment" means the direct investment of money by the fund in a qualified business for the purchase of shares of stock, with an option to make an additional investment in an option or warrant or a follow-on investment, in the discretion of the authority, all of which is matched by an investment by a qualified venture firm.
"Qualified venture firm" means a venture firm that is approved by the authority as a qualified venture firm pursuant to section 29 of P.L.2020, c.156 (C.34:1B-297).
"Special purpose vehicle" means an entity controlled by or under common control with a venture firm that is formed solely for the purpose of investing in a New Jersey high-growth business alongside the venture firm.
"Targeted industry" means any industry identified from time to time by the authority which shall initially include advanced transportation and logistics, advanced manufacturing, aviation, autonomous vehicle and zero-emission vehicle research or development, clean energy, life sciences, hemp processing, information and high technology, finance and insurance, professional services, film and digital media, non-retail food and beverage businesses including food innovation, and other innovative industries that disrupt current technologies or business models.
"Venture firm" means a partnership, corporation, trust, or limited liability company that invests cash in a business during the early or expansion stages of a business in exchange for an equity stake in the business in which the investment is made. Venture firm may include a venture capital fund, a family office fund, or a corporate investor fund, provided that a professional manager administers the venture firm.
(cf: P.L.2020, c.156, s.21)
2. Section 24 of P.L.2020, c.156 (C.34:1B-292) is amended to read as follows:
24. a. The authority shall sell the tax credits authorized pursuant to section 22 of P.L.2020, c.156 (C.34:1B-290) to purchasers through a competitive auction process.
b. The authority shall determine the form and manner in which potential purchasers may bid for tax credits available under the program. To be awarded a tax credit under the program, a potential purchaser shall:
(1) specify the requested amount of tax credits, which shall not be less than $500,000;
(2) specify the amount the potential purchaser will pay in exchange for the requested amount of tax credits, which shall be set by the authority at an amount not [be] less than 75 percent of the requested dollar amount of tax credits;
(3) commit to serve on the New Jersey Innovation Evergreen Advisory Board, established pursuant to section 32 of P.L.2020, c.156 (C.34:1B-300), and to otherwise provide mentorship, networking, and collaboration opportunities to qualified businesses that receive funding under the program; and
(4) provide any other information that the chief executive officer of the authority determines is necessary.
c. Prior to an auction, the authority shall establish and disclose to bidders the weighted criteria the authority will utilize, which the authority shall base on the price offered to purchase the tax credits and the quality of the mentorship and networking opportunities and other support of the State's innovation ecosystem offered by a purchaser in its bid. The authority may pro rate the amount of tax credits allocated to each purchaser. A potential purchaser that submits a bid for tax credits under this section shall receive a written notice from the authority indicating whether the authority has approved it as a purchaser of tax credits and, if so, the amount of tax credits approved.
d. Except as provided in section 22 of P.L.2020, c.156 (C.34:1B-290), the authority shall hold one competitive auction per calendar year.
e. The authority may contract with an independent third party to conduct the competitive bidding process through which State tax credits issued by the authority may be sold.
(cf: P.L.2021, c.160, s.11)
3. Section 26 of P.L.2020, c.156 (C.34:1B-294) is amended to read as follows:
26. a. A purchaser shall apply a credit awarded pursuant to sections 20 through 34 of P.L.2020, c.156 (C.34:1B-288 through C.34:1B-302) against the purchaser’s State tax liability due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) [of the purchaser] , sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5 for the current privilege period as of the date of the credit's approval. A purchaser may carry forward an unused credit resulting from the limitations of subsection b. of this section, if necessary, for use in the seven privilege periods next following the privilege period for which the credit is awarded.
b. The director shall prescribe the order of priority of the application of the credits awarded under sections 20 through 34 of P.L.2020, c.156 (C.34:1B-288 through C.34:1B-302) and any other credits allowed by law. The amount of a credit applied under sections 20 through 34 of P.L.2020, c.156 (C.34:1B-288 through C.34:1B-302) against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period, together with any other credits allowed by law, shall not reduce the tax liability of the purchaser to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5).
(cf: P.L.2020, c.156, s.26)
4. Section 27 of P.L.2020, c.156 (C.34:1B-295) is amended to read as follows:
27. a. A purchaser may apply to the authority and the director for a tax credit transfer certificate [, in the privilege period during which the director allows the purchaser a tax credit pursuant to sections 20 through 34 of P.L.2020, c.156 (C.34:1B-288 through C.34:1B-302),] in lieu of the purchaser being allowed to apply any amount of the tax credit against the purchaser's State tax liability. A tax credit may be sold or assigned, in full or in part, to another person that may have a tax liability pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5. The tax credit transfer certificate provided to the purchaser shall include a statement waiving the purchaser's right to claim the credit that the purchaser has elected to sell or assign.
b. The purchaser shall not sell or assign a tax credit transfer certificate allowed under this section for consideration received by the purchaser of less than 85 percent of the transferred credit amount before considering any further discounting to present value which shall be permitted. The tax credit transfer certificate issued to a purchaser by the director shall be subject to any limitations and conditions imposed on the application of State tax credits pursuant to section 26 of P.L.2020, c.156 (C.34:1B-294) and any other terms and conditions that the director may prescribe.
c. A buyer or assignee of a tax credit transfer certificate pursuant to this section shall not make any subsequent transfers, assignments, or sales of the tax credit transfer certificate.
d. Ten percent of the consideration received by a purchaser from the sale or assignment of a tax credit transfer certificate pursuant to this section shall be remitted to the director and deposited in the General Fund of the State.
e. The authority shall publish on its Internet website the following information concerning each tax credit transfer certificate approved by the authority and the director pursuant to this section:
(1) the name of the transferor;
(2) the name of the transferee;
(3) the value of the tax credit transfer certificate;
(4) the State tax against which the transferee may apply the tax credit; and
(5) the consideration received by the transferor.
(cf: P.L.2020, c.156, s.27)
15. Section 38 of P.L.2020, c.156 (C.34:1B-306) is amended to read as follows:
38. a. (1) There is established the Food Desert Relief Program to be administered by the New Jersey Economic Development Authority. The program shall include tax credit components, as provided in sections 39 and 40 of P.L.2020, c.156 (C.34:1B-307 and C.34:1B-308), in order to incentivize businesses to establish and retain new supermarkets and grocery stores in food desert communities.
(2) The total value of tax credits approved by the authority pursuant to sections 39 and 40 of P.L.2020, c.156 (C.34:1B-307 and C.34:1B-308) shall not exceed the limitations set forth in section 98 of P.L.2020, c.156 (C.34:1B-362).
b. The authority, in consultation with the Department of Agriculture and the Department of Community Affairs, shall initially designate not more than 50 separate geographic areas that have limited access to nutritious foods as food desert communities in this State. The authority, in consultation with the Department of Agriculture and the Department of Community Affairs, shall develop criteria for the designation of food desert communities, but each separate food desert community shall consist of a distinct geographic area with a single defined border. The criteria shall, at a minimum, incorporate analysis of municipal or census tract poverty statistics, food desert information from the Economic Research Service of the United States Department of Agriculture, healthier food retail tract information from the federal Centers for Disease Control and Prevention, and residents' access to nutritious foods, such as fresh fruits and vegetables, through supermarkets and grocery stores. The authority, in consultation with the departments, may also consider in making food desert community designations pursuant to this subsection, data related to municipal or census tract population size and population density, the number of residents who receive Supplemental Nutrition Assistance Program (SNAP) benefits within a municipality, the extent to which a municipality's residents have access to a personal vehicle, and a municipality's Municipal Revitalization Index distress score, obesity rate, and unemployment rate. The authority, in consultation with the departments, shall continuously evaluate areas previously designated as food desert communities and assess whether they still meet the criteria for designation as a food desert community and may designate additional food desert communities once every three years following the effective date of sections 35 through 42 of P.L.2020, c.156 (C.34:1B-303 through C.34:1B-310).
c. To receive a tax credit under section 39 or 40 of P.L.2020, c.156 (C.34:1B-307 or C.34:1B-308), a taxpayer shall submit an application to the authority in the form and manner prescribed by the authority and in accordance with criteria established by the authority, which at minimum will include a commitment to accept benefits from federal nutrition assistance programs, such as the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Following the approval of an application, the authority may, pursuant to an award agreement, award tax credits to an eligible taxpayer that:
(1) develops and opens for business to the public the first or second supermarket or grocery store in a designated food desert community; or
(2) owns, leases, or subleases, and operates the first or second new supermarket or grocery store in a designated food desert community.
d. (1) The authority may sell all or a portion of the tax credits made available in a fiscal year pursuant to subsection a. of this section through a competitive auction process or a publicly advertised solicitation for offers and dedicate the proceeds from such sale to provide grants and loans to qualifying supermarkets, grocery stores, mid-sized food retailers, small food retailers, and any other eligible entity. The amount of any grant or loan provided pursuant to this subsection shall be in accordance with the need of the supermarket, grocery store, mid-sized food retailer, small food retailer, or any other eligible entity, as determined by the authority. The authority shall sell tax credits pursuant to this section in the manner determined by the authority; provided, however, the authority shall not sell tax credits for less than 85 percent of the tax credit amount. Any credit sold shall be valid in the privilege period in which the sale is [completed] approved, and any unused portion thereof may be carried forward into the next seven privilege periods or until exhausted, whichever is earlier. Grants and loans made available pursuant to this subsection shall be awarded to entities that:
(a) operate a supermarket or grocery store that meets criteria established by the authority, which criteria shall, at minimum, include a commitment to accept benefits from federal nutrition assistance programs, including, but not limited to, the Supplemental Nutrition Assistance Program (SNAP) and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), in a designated food desert community;
(b) own, lease, or sublease, and operate a mid-sized food retailer or small food retailer that commits to selling nutritious foods, including fresh fruits and vegetables, in a designated food desert community; or
(c) at the discretion of the authority, support initiatives to strengthen food security of residents in food desert communities.
(2) A supermarket, grocery store, mid-sized food retailer, small food retailer, or other eligible entity shall submit an application to the authority to receive a grant or loan pursuant to this subsection. The application shall be submitted in the form and manner prescribed by the authority and in accordance with criteria established by the authority. An entity eligible for a grant or loan under subparagraph (a) of paragraph (1) of this subsection shall not be required to submit a separate application to the authority for the grant or loan, provided that the entity has submitted an application to the authority pursuant to subsection c. of this section.
(3) Prior to awarding a grant or loan to an applicant supermarket, grocery store, mid-sized food retailer, small food retailer, or other eligible entity pursuant to this subsection, the authority shall confirm with the Department of Labor and Workforce Development, the Department of Environmental Protection, and the Department of the Treasury whether the applicant is in substantial good standing with the respective department, or has entered into an agreement with the respective department that includes a practical corrective action plan for the applicant. The applicant shall certify that any contractors or subcontractors that perform work at the qualifying supermarket or grocery store: (a) are registered as required by "The Public Works Contractor Registration Act," P.L.1999, c.238 (C.34:11-56.48 et seq.); (b) have not been debarred by the Department of Labor and Workforce Development from engaging in or bidding on Public Works Contracts in the State; and (c) possess a tax clearance certificate issued by the Division of Taxation in the Department of the Treasury. The authority may also contract with an independent third party to perform a background check on the entity.
(4) An applicant supermarket, grocery store, mid-sized food retailer, small food retailer, or other eligible entity shall, as required at the discretion of the authority, submit to the authority satisfactory information pertaining to the eligible equipment costs and eligible technology costs, as certified by a certified public accountant, certifications that all information provided by the applicant to the authority is true, including information contained in the application, any agreement pertaining to the award of grants or loans under the program, any amendment to such an agreement, and any other information submitted by the applicant to the authority pursuant to sections 35 through 42 of P.L.2020, c.156 (C.34:1B-303 through C.34:1B-310), and evidence of the eligible equipment costs and eligible technology costs of the applicant. The applicant, or an authorized agent of the applicant, shall certify under the penalty of perjury that the information provided pursuant to this subsection is true.
e. The authority may establish a technical assistance fund to assist any entity that is eligible for a tax credit, grant, or loan under this section. The authority, through the technical assistance fund, may make grants to entities to assist qualifying supermarkets, grocery stores, mid-sized food retailers, small food retailers, or other eligible entities in implementation of best practices for increasing the accessibility of nutritious foods in food desert communities. Technical assistance shall be provided either directly by the authority or through a not-for-profit or for-profit entity and made available in English as well as the two most commonly spoken languages in New Jersey other than English. At the discretion of the authority, funds to support technical assistance may be provided in addition to, or in lieu of, any tax credit, grant, or loan awarded under sections 35 through 42 of P.L.2020, c.156 (C.34:1B-303 through C.34:1B-310).
f. (1) The authority shall require that any tax credits, grants, or loans awarded by the authority under the program be utilized by the recipient for one or more of the following purposes, which shall be set forth in the award agreement:
(a) to mitigate a project financing gap;
(b) to mitigate the initial operating costs of the supermarket or grocery store;
(c) to mitigate the eligible equipment costs or eligible technology costs of the supermarket, grocery store, mid-sized food retailer, small food retailer, or other eligible entity in order to make nutritious foods more accessible and affordable to residents within food desert communities; or
(d) to support initiatives to ensure the food security of residents in food desert communities.
(2) The value of tax credits, grants, or loans awarded to individual entities under the program shall not exceed:
(a) in the case of an entity eligible under paragraph (1) of subsection c. of this section, 40 percent of the total project cost for the first supermarket or grocery store in a designated food desert community, and 20 percent of the total project cost for the second supermarket or grocery store in the food desert community; and
(b) in the case of an entity eligible under paragraph (2) of subsection c. of this section, the initial operating costs of the first supermarket or grocery store in a designated food desert community, and one-half of the initial operating costs of the second supermarket or grocery store in the food desert community;
(c) in the case of an entity eligible for a grant or loan under subparagraph (b) of paragraph (1) of subsection d. of this section, the eligible equipment costs and eligible technology costs of the supermarket, grocery store, mid-sized food retailer, small food retailer, or other eligible entity; and
(d) in the case of an entity eligible for a grant or loan under subparagraph (c) of paragraph (1) of subsection d. of this section, the costs of initiatives to ensure the food security of residents in food desert communities.
g. An entity that develops and opens the first or second new supermarket or grocery store in a designated food desert community shall be eligible for a tax credit only if the entity demonstrates to the authority at the time of application that: (1) each worker employed to perform construction at the project shall be paid not less than the prevailing wage rate for the worker's craft or trade, as determined by the Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.) and P.L.2005, c.379 (C.34:11-56.58 et seq.); (2) without the tax credit award, the project is not economically feasible; (3) a project financing gap exists; and (4) except for demolition and site remediation activities, the entity has not commenced any construction at the site of the project before submitting an application, unless the authority determines that the project would not be completed otherwise.
h. (1) Except as provided in paragraph (2) of this subsection, a labor harmony agreement shall be required if the State has a proprietary interest in a supermarket or grocery store and the agreement shall remain in effect for as long as the State acts as a market participant in the project. The provisions of this paragraph shall apply to a supermarket or grocery store that will have more than 10 employees.
(2) A labor harmony agreement under paragraph (1) of this subsection shall not be required if the authority determines that the supermarket or grocery store would not be feasible if a labor harmony agreement is required. The authority shall support the determination by a written finding, which provides the specific basis for the determination.
(3) As used in this subsection, "labor harmony agreement" means an agreement between a business that serves as the owner or operator of a supermarket or grocery store and one or more labor organizations, which requires, for the duration of the agreement: that any participating labor organization and its members agree to refrain from picketing, work stoppages, boycotts, or other economic interference against the business; and that the business agrees to maintain a neutral posture with respect to efforts of any participating labor organization to represent employees at a supermarket or grocery store, agrees to permit the labor organization to have access to the employees, and agrees to guarantee to the labor organization the right to obtain recognition as the exclusive collective bargaining representatives of the employees at a supermarket or grocery store by demonstrating to the New Jersey State Board of Mediation, Division of Private Employment Dispute Settlement, or a mutually agreed-upon, neutral, third-party, that a majority of workers in the unit have shown their preference for the labor organization to be their representative by signing authorization cards indicating that preference. The labor organization or organizations shall be from a list of labor organizations that have requested to be on the list and that the Commissioner of Labor and Workforce Development has determined represent substantial numbers of supermarket or grocery store employees in the State.
i. A recipient shall certify that all factual representations made by the recipient in the application or award agreement are true under the penalty of perjury. A material misrepresentation of fact in either the application or award agreement may result in recession and recapture of any grants or tax credits awarded, or acceleration of any loans made, under sections 35 through 42 of P.L.2020, c.156 (C.34:1B-303 through C.34:1B-310).1
(cf: P.L.2022, c.47, s.2)
1[5.] 6.1 This act shall take effect immediately.