A5546

An Act establishing the “Community Investment and Local Ownership Pilot Program,” supplementing Title 34 of the Revised Statutes, and making an appropriation.

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

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

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

"Business entity" means a corporation, limited liability company, limited liability partnership, association, partnership, joint stock company, joint venture, mutual fund trust, or other legal form of organization, whether organized for-profit or not-for-profit.

"Community development financial institution" means the same as that term is defined pursuant to section 4702 of the federal “Community Development Banking and Financial Institutions Act of 1994,” 12 U.S.C. s.4702.

"Community investment project" means a local economic development project or local business investment within a pilot municipality that the authority determines would benefit from community financing and funding. A "community investment project" may include, but not be limited to: improvements to small businesses, minority-owned businesses, woman-owned businesses, and veteran-owned businesses; affordable housing projects; community revitalization projects; and other localized economic development projects that provide individual donors with an equity interest in the project.

"Fund" means the "Community Investment and Local Ownership Fund" established pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Individual contribution" means an amount, which amount is at least $50 but not more than $500, that an individual donor donates for a community investment project.

"Individual donor" means a business entity or individual that makes an individual contribution.

"MRI distress score" means a municipal revitalization index distress score, as documented in the 2026 Municipal Revitalization Index developed by the Department of Community Affairs.

"Pilot municipality" means a municipality selected to participate in the pilot program established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Pilot program" or "program" means the "Community Investment and Local Ownership Pilot Program" established pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Qualified financial intermediary" means a financial institution, including, but not limited to, a community development financial institution, credit union, or commercial bank, that is experienced in financial management related to local business entities, community and economic development initiatives, or charitable contributions.

"State matching contribution" means an amount of monies that the State provides for a community investment project based on the amount of an individual contribution made for the project.

2. a. The New Jersey Economic Development Authority shall establish a three-year pilot program known as the "Community Investment and Local Ownership Pilot Program" for the purpose of providing State matching contributions valued at 100 percent of the cumulative amount of individual contributions to community investment projects in pilot municipalities.

b. (1) The authority, in consultation with the Director of the Division of Local Government Services in the Department of Community Affairs, shall select for participation in the pilot program two municipalities in each of the northern, central, and southern regions of the State, as follows:

(a) a northern regional pilot municipality shall be located in Bergen, Essex, Hudson, Morris, Passaic, Sussex, or Union county;

(b) a central regional pilot municipality shall be located in Hunterdon, Mercer, Middlesex, Monmouth, or Somerset county; and

(c) a southern regional pilot municipality shall be located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem, or Ocean county.

(2) A pilot municipality shall be selected based upon factors determined by the authority, including, but not limited to: the municipality’s average and median household income, poverty rate, unemployment rate, and population change rate; the municipality’s MRI distress score; the municipality’s designation as a distressed municipality, enhanced area, government-restricted municipality, incentive area, qualified incentive tract, or SDA municipality for the purposes of other economic development programs; or any other factor indicating a municipality’s social, economic, physical, or fiscal condition.

(3) The authority, in consultation with the Director of the Division of Local Government Services in the Department of Community Affairs, shall establish a local advisory board within each pilot municipality to provide accountability and oversight for the operation of the program in each pilot municipality. The local advisory board shall be comprised of individuals that are geographically and financially proximate to a pilot municipality, including, but not limited to: residents of the pilot municipality; representatives of nonprofit organizations located within 20 miles of a pilot municipality; elected or appointed officials representing all or part of a pilot municipality; representatives of qualified financial intermediaries; and developers and owners of community investment projects.

3. a. As part of the program, the authority may facilitate the coordination between community investment projects and qualified financial intermediaries, which shall serve as the custodian of all individual contributions made by individual donors for the project. The authority shall only approve community investment projects that are partnered with a qualified financial intermediary. A qualified financial intermediary shall receive individual contributions from individual donors and provide those funds to the community investment projects. The authority shall provide a State matching contribution to the qualified financial intermediary for each individual contribution received for a community investment project.

b. (1) The authority shall solicit applications from the developers or owners of community investment projects within a pilot municipality for participation in the program.

(2) To be eligible to participate in the program, the developers or owners of a community investment project shall provide an economic or equity interest, as approved by the authority, to each individual donor that contributes monies to the project pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). The forms of economic or equity interest provided to individual donors to the project may include, but shall not be limited to: profit-sharing arrangements, such as cash payout plans; stock options or other equity interests; dividends; and voting or approval rights related to the governance or operations of the business or project.

(3) The developer or owner of a community investment project shall submit an application to the authority in a form and manner prescribed by the authority. In addition to any other information that the authority may deem appropriate, the application shall include information regarding the nature of the economic development project or local business investment, contact information of the developer, the location of the community investment project, contact information for the qualified financial intermediary that is partnered with the project, and any proposed economic or equity interest to be provided to individual donors.

(4) (a) The authority shall review and approve applications submitted pursuant to this section on a rolling basis, subject to the availability of funds for the program. The authority shall approve community investment projects based on the viability of the project or business investment and the estimated positive impact on the community, including projects developed with community investment and local ownership principles in mind. The authority shall accept and consider any letters of support or project endorsements submitted by a pilot municipality for a community investment project. The authority shall also consider other evidence of local support for the project, including, but not limited to, any changes in local zoning regulations necessary to accommodate the development of the project.

(b) Upon approval of any application pursuant to this section, and upon the satisfaction of such additional requirements as the authority deems appropriate, the authority shall notify the developer of a community investment project and the qualified financial intermediaries that shall be partnered with the project.

4. a. (1) An individual donor may contribute monies to a qualified financial intermediary to support a community investment project within a pilot municipality. The authority may establish a limitation on the maximum cumulative total value of individual contributions that may be contributed by an individual donor during the three-year pilot program.

(2) Upon receiving a contribution of monies from an individual donor for a community investment project, the qualified financial intermediary shall provide written notice of the contribution, including the name of the donor and the amounts contributed, to the authority and to the developer or owner of the project. After receiving such notice, the developer or owner of the community investment project shall provide an economic or equity interest to the individual donor, as such interest shall be approved and required by the authority pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). If an individual donor receives an equity interest in the community investment project or any business entity owning the project, the individual donor shall retain the equity interest for at least three years, unless the authority determines that a financial hardship or other extenuating circumstances require the individual donor to sell, transfer, or relinquish ownership of the equity interest.

b. For each individual contribution, the authority shall provide a State matching contribution in the amount of 100 percent of the individual contribution. Following notification from a qualified financial intermediary that an individual contribution has been received for a community investment project, the authority shall provide the required State matching contribution to the qualified financial intermediary from the monies allocated to the fund established pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).

5. a. There is established in the New Jersey Economic Development Authority a special nonlapsing fund to be known as the "Community Investment and Local Ownership Fund," which shall serve as the repository of all monies used to support the Community Investment and Local Ownership Pilot Program.

b. For the duration of the pilot program, the State shall annually appropriate such amounts as necessary to the authority, for deposit into the "Community Investment and Local Ownership Fund," to support the provision of State matching contributions to qualified financial intermediaries to support community investment projects under the pilot program.

6. On or before the first day of the 40th month next following the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the authority shall submit a report to the Governor and, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), to the Legislature. The report shall provide information on the success of the pilot program, challenges faced by the program, and recommendations on whether or not to make the pilot program permanent. As part of the report, the authority shall evaluate the impact of the pilot program on the following economic measurements within each pilot municipality: the rates of local ownership of businesses; the rates of business survival; wealth creation for local households; job creation; and the rates of affordable housing, including an analysis of whether affordable housing unit availability and access was impacted by the pilot program.

7. Notwithstanding any provision of P.L.1968, c.410 (C.52:14B-1 et seq.) or any other law to the contrary, the authority may adopt, immediately upon filing with the Office of Administrative Law and no later than the 90th day after the effective date of this act, such rules and regulations as the authority deems necessary to implement the provisions of this act, which regulations shall be effective for a period not to exceed 12 months. The regulations shall thereafter be amended, adopted, or readopted by the authority in accordance with the provisions of P.L.1968, c.410 (C.52:14B-1 et seq.).

8. There is appropriated the sum of $30,000,000 from the General Fund to the New Jersey Economic Development Authority for deposit into the "Community Investment and Local Ownership Fund," established pursuant to section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).

9. This act shall take effect immediately.

STATEMENT

This bill establishes the “Community Investment and Local Ownership Pilot Program” as a three-year pilot program within the New Jersey Economic Development Authority (authority). The purpose of the pilot program is to incentivize the investment in and development of certain economic development projects or business investments in pilot municipalities.

Under the bill, the authority would establish the pilot program for the purpose of providing funds to community investment projects in the form of individual contributions and State matching contributions. A “community investment project” means a local economic development project or local business investment within a pilot municipality that the authority determines would benefit from community financing and funding. A "community investment project" may include, but not be limited to: improvements to small businesses, minority-owned businesses, woman-owned businesses, and veteran-owned businesses; affordable housing projects; community revitalization projects; and other localized economic development projects that provide individual donors with an equity interest in the project.

Under the bill, the authority, in consultation with the Director of the Division of Local Government Services in the Department of Community Affairs, would select six pilot municipalities for inclusion in the pilot program. The pilot municipalities would consist of two municipalities each from the northern, central, and southern regions of the State. The pilot municipalities would be selected based upon various factors determined by the authority, including, but not limited to: the municipality’s average and median household income, poverty rate, unemployment rate, and population change rate; the municipality’s MRI distress score; the municipality’s designation as a distressed municipality, enhanced area, government-restricted municipality, incentive area, qualified incentive tract, or SDA municipality for the purposes of other economic development programs; or any other factor indicating a municipality’s social, economic, physical, or fiscal condition.

The authority would be required to establish a local advisory board within each pilot municipality to provide accountability and oversight of the operation of the program. Each local advisory board would be comprised of individuals that are geographically and financially proximate to a pilot municipality, including, but not limited to: residents of the pilot municipality; representatives of nonprofit organizations located within 20 miles of a pilot municipality; elected or appointed officials representing all or part of a pilot municipality; representatives of qualified financial intermediaries; and developers and owners of community investment projects.

The developer or owner of a community investment project within an approved pilot municipality would be required to submit an application to the authority in a form and manner that the authority determines. A community investment project would be required to partner with a qualified financial intermediary prior to application approval and during the project’s development, which intermediary would serve as the custodian of all individual contributions made for the project. A “qualified financial intermediary” means a financial institution, including, but not limited to, a community development financial institution, credit union, or commercial bank, that is experienced in financial management related to local business entities, community and economic development initiatives, or charitable contributions. The authority may facilitate this relationship, but the project and qualified financial intermediary are required to be partnered prior to project approval.

In order to be eligible to participate in the program, the developers or owners of a community investment project would be required to provide an economic or equity interest to each individual donor that contributes monies to the project. The economic or equity interest would need to be approved by the authority, and the forms of the interest may include, but not be limited to: profit-sharing arrangements, such as cash payout plans; stock options or other equity interests; dividends; and voting or approval rights related to the governance or operations of the business or project.

The project application would also be required to include information regarding the nature of the economic development project or local business investment, contact information of the applicant, the location of the project within a pilot municipality, contact information for the qualified financial intermediaries partnering with the project, and any proposed economic or equity interest for donors. The authority would approve community investment projects on a rolling basis, based on the viability of the project and the estimated positive impact on the community, including projects developed with community investment and local ownership principles in mind. The authority would be required to accept and consider any letters of support or project endorsements submitted by a pilot municipality for a community investment project. The authority would also be required to consider other evidence of local support for the project, including, but not limited to, any changes in local zoning regulations necessary to accommodate the development of the project. Following project approval, the authority would notify both the developer of the community investment project and any qualified financial intermediary partnering with the project.

The authority, following notification of an individual contribution made to a project, would provide a State matching contribution valued at 100 percent of the value of the individual contributions made by individual donors to the project. Under the bill, individual contributions can be made in an amount of between $50 and $500.

Upon receiving a contribution of monies from an individual donor for a community investment project, the qualified financial intermediary would be required to provide written notice of the contribution, including the name of the donor and the amounts contributed, to the authority and to the developer or owner of the project. After receiving such notice, the developer or owner of the community investment project would be required to provide an economic or equity interest to the individual donor. If an individual donor receives an equity interest in the community investment project or any business entity owning the project, the individual donor would be required to retain the equity interest for at least three years, unless the authority determines that a financial hardship or other extenuating circumstances require the individual donor to sell, transfer, or relinquish ownership of the equity interest.

The bill would also create a special nonlapsing fund within the authority known as the “Community Investment and Local Ownership Fund,” for the purpose of providing State matching contributions to community investment projects. This bill would appropriate $30 million to the fund. Additionally, this bill would require the authority to submit a report to the Governor and the Legislature detailing the pilot program’s successes and challenges faced and recommending whether the program should be made permanent. At a minimum, the authority would be required to evaluate the impact of the pilot program on the following economic measurements within each pilot municipality: the rates of local ownership of businesses; the rates of business survival; wealth creation for local households; job creation; and the rates of affordable housing, including an analysis of whether affordable housing unit availability and access was impacted by the pilot program.