Programs Inside Jersey City’s UEZ Trying to Make Do with Much Less

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Despite a loss of about $12 million in revenues, those managing programs inside Jersey City’s Urban Enterprise Zone (UEZ) say they are forging ahead, doing the best they can in keeping the areas viable for businesses.

“The state has kept the program, which is better than what was introduced in the original [Fiscal Year 2011] budget,” city spokesperson Jennifer Morrill says. “However, we did not get back as much as expected when the final budget was adopted.”

The city suffered a total loss of about $12 million from various forms of UEZ knife-wielding, according to Morrill, leaving only $4.2 million available for this entire fiscal year.
 
The city’s Economic Development Corporation (JCEDC), which distributes the UEZ money, is now being forced to embrace a “half-a-loaf is better than no loaf” philosophy on state funding, and Mayor Healy is working to see if there is any new federal funding that might help fill the UEZ void.
 
The Urban Enterprise Zone Authority runs the statewide fund under the New Jersey Department of Community Affairs. The designated areas, stretching over about a third of Jersey City’s huge landscape, enable businesses to impose a lower state sales tax (3.5 percent) than in non-UEZ locales.
 
“Prior to the current state budget, funds were dedicated to each UEZ municipality from the reduced sales tax collected,” Morrill explains. “They were held in Trenton in a separate account.”
 
But now the formula has changed.

“All tax revenues earned in FY 2011 will be credited to the State of New Jersey General Fund,” she says, instead of being set aside for UEZs. Municipalities are instead receiving more limited “allocations” not tied to sharing tax revenues with the state. 
 
Still, Morrill maintains that Healy remains positive about the  program since he feels it can still greatly benefit Jersey City, even if on a smaller scale.
 
“We continue to work with businesses seeking to relocate into Jersey City’s UEZs,” she assures. “The mayor believes all our Special Improvement Districts (SIDs) are still moving forward, along with efforts such as installing new security cameras along Westfield Avenue and job training.”
 
With this year’s budget, Gov. Chris Christie moved to take all UEZ tax receipts away from member municipalities as part of his effort to close New Jersey’s estimated $11 billion deficit.

Previously, UEZ used a 20-year funding mechanism that provided much more money to zones, according to state Department of Community Affairs spokesperson Lisa Ryan.

She explains that, via a process called “scale down,” the percentage of proceeds kept were to gradually shift from  UEZ communities to the state at five-year intervals.
 
Originally, the municipalities were to keep 100 percent of the UEZ tax tab for the first five years, with the state sharing those revenues through the middle 10. Over the final five years, all proceeds were to be kept by the state.
 
Yet Christie accelerated New Jersey’s total take with the stroke of his budget pen last June, and now the state keeps 100 percent of the UEZ tax receipts.
 
Because of that, the people who run some of Jersey City’s SIDs, which rely in part on UEZ money to fund their operations, are having to do things a bit differently, given the lack of available cash.

Central Avenue SID manager David Diaz says he’s already started assessing where the Heights organization will need to cut.
 
While not giving any specifics, Diaz says everything from special events to key marketing programs are at risk. He adds that he is consulting with his SID’s management association over priorities, and should have final answers in about two months.
 
“We were at the stage where we were receiving 100 percent of the one-to-one matching grant, before the new budget took effect,” he says. We’ve lost 45 percent of that, and are already feeling the impact.”

Diaz’s SID used to receive $92,000 in these grants from the city, with it can no longer offer due to cutbacks. The grants combined funding, from the state and the JCEDC, to pay for UEZ-related operating expenses.

The JCEDC says this year it is giving each SID in Jersey City just $50,000 in grants to replace the matching grants that were lost. While it is something, it can’t replace what the organizations previously received.
 
“We really appreciate that the JCEDC has stepped in to provide us grants totaling $50,000,” Diaz points out. “While it’s less than what we had been receiving, it’s still a big help. And every penny goes back into our SID.” 

The Journal Square SID, by far the city’s largest, is facing a grants reduction from $673,000 to $50,000, while the Historic Downtown SID has been cut from $155,000 to $50,000. The McGinley Square and Main Street/Monticello SIDs will be cut from $72,300 and $70,000, respectively, to $50,000.

But the Historic Downtown SID’s Nikol Floros suggests her area will not be that adversely affected by the huge UEZ cut.
 
“I really believe the most important thing is that the lower sales tax is still in place, which is of critical importance to our merchants,”  she says. “When they see that there is no more funding available to improve their facades, they might start asking questions.”
 
“However, I do feel our sponsors will manage to come up with the money needed to continue meeting the essential needs of our particular district,” Floros asserts. “I’m very satisfied with our efforts at this point.”

The Historic Downtown SID did eliminate one popular program earlier this year, a subsidy that helped its member businesses buy advertising in local publications (including this one).
 
Still, Floros harbors no grudges against Christie for the changes.

“With all the corruption problems we’ve had in New Jersey, I just feel perhaps our governor wants to make sure all this money is being used legitimately,” she says. “If he concludes the program is being run effectively, perhaps he’ll restore funding if he can.” 
 
Yet Don Smartt, district administrator of Journal Square Restoration Corporation, a private nonprofit that operates the Journal Square SID, says UEZs across the state should probably expect reduced government funding for the long haul — even after Christie leaves office.
 
“It’s not just this governor, it’s the entire economy,” he says  “I just think you’re looking at a difficult situation here in New Jersey over the next 15 years. The state won’t be in a position to significantly increase support for these programs for quite awhile.”
 
Thus, says Smartt, cuts will have to be made within his SID, under the new budget. He was already forced to cancel the Square’s free summer concert series, and more cuts are clearly ahead, though he says he’s not yet sure what those will be.

Still, citing his long history managing business district organizations, Smartt says he still relishes the challenge in these toughest of times. 
 
“Over my many years, I’ve learned there are two programs which must always receive the highest funding priority: having a sufficient police presence in your neighborhoods and fixing sidewalks,” he says. “If those two things aren’t always taken care of, you’re not going to be successful.”

Chris Neidenberg

a freelance reporter with extensive experience covering municipalities throughout North Jersey.