The Garden State’s new governor is taking a hands-on approach to job creation, pledging to improve the business climate through deregulation and lower tax rates.
Gov. Chris Christie, the Garden State’s new chief executive, says he is committed to get New Jersey working again by giving the state’s current and future businesses a renewed competitive advantage through deregulation and reduced tax rates that are geared to attract and create new jobs.
Gov. Christie has pledged to be a “pro-jobs” leader who will take a personal role in overseeing the implementation of pro-growth economic development policies and projects. Christie did not waste any time acting on this pledge: in his first week in office last month he consolidated Trenton’s fragmented economic development activities into a new agency—called New Jersey Partnership for Action—which will utilize the resources of the current Economic Development Authority.
New Jersey Partnership for Action will act as a one-stop shop for new businesses, smoothing the way for plant openings or relocations. The agency will walk new companies through the regulatory process and assist with tax incentives to make the process more efficient. By creating these public-private partnerships to implement economic growth strategies, New Jersey expects to have more success in fostering private-sector job growth.
There are two primary elements to the Partnership for Action plan:
• A “true partnership” and collaboration with the private sector. CEOs and business leaders will work hand-in-hand with the Christie Administration to help attract their fellow CEOs and “sell” New Jersey to their business colleagues.
• The building of trust in an effective system to help potential investors or prospective business owners obtain their lawful regulatory or other governmental approvals in a timely fashion. The partnership will ensure regulatory decisions in a reasonable time frame, Gov. Christie says.
To emphasize his commitment to the overhaul of economic development practices in New Jersey, Christie appointed Lt. Gov. Kim Guadagno to chair the Partnership, restoring a voice for economic development in the governor’s cabinet. One of the lieutenant governor’s principal responsibilities will be to lead the new agency and create an effective infrastructure for economic growth. As part of the streamlining effort, the position of Chief of the Office of Economic Growth is being eliminated. Also, financing and lending responsibilities of the NJEDA will be augmented by the Partnership for Action via more aggressive marketing and promotion activities, and permit and regulatory decision expediting.
FULL MENU OF INCENTIVES
The New Jersey Partnership for Action will have a bevy of incentives, many recently expanded, to deploy in its job-creation push, including:
The Business Employment Incentive Program, is available to technology and biotechnology companies that create at least 10 new jobs and to non-technology businesses that create at least 25 new jobs in New Jersey. Eligible businesses may receive grants for up to 10 years that equal as much as 80 percent of the state income taxes withheld from the salaries of employees who fill the newly created jobs.
Business Retention and Relocation Assistance Program grants help to preserve jobs in danger of being relocated out-of-state. There must be a minimum of 50 retained full-time jobs from one or more locations within the state to new location(s) within the state. Grants are up to $1,500 per job.
The Edison Innovation Fund seeks to develop, sustain and grow technology and life sciences businesses that will lead to well-paying job opportunities for New Jersey residents. The fund provides an integrated set of resources that includes loans, tax credits and venture fund investments, which are designed to support technology and life sciences companies in New Jersey through their discovery, development and commercialization stages.
Clean Energy Solutions provides a suite of financing programs to support New Jersey’s comprehensive Energy Master Plan. These programs include interest-free loans and grants to ensure that commercial, industrial and institutional entities have the resources they need to grow and prosper while simultaneously reducing New Jersey’s carbon footprint. Current programs include the Clean Energy Solutions Capital Investment Loan/Grant Program, the Combined Heat and Power Program and the Clean Energy Manufacturing Fund. Other related programs also are under development.
The Preferred Lender Program is an effective resource for New Jersey Economic Development Authority banking partners and their borrowers that need affordable capital for fixed assets like buildings and equipment and working capital for operating expenses. It features a three-day turnaround time for loan approval and applies to transactions in which the EDA buys a participation in bank financing and/or guarantees a portion of a bank loan. The quick turnaround time from approval to closing provides a strong incentive for borrowers, while the EDA’s exposure by participating in or guaranteeing a portion of a loan reduces the lender’s risk. Under the program, the EDA provides up to 50 percent of the bank loan amount for fixed asset loans, with a maximum participation of $1.25 million and a maximum guarantee of $1.5 million. For working capital loans, the EDA offers up to 50 percent of the bank loan amount, with a maximum participation of $750,000 and maximum guarantee of $1.5 million. EDA participation and guarantee terms may be up to 10 years for fixed asset loans and up to five years for working capital loans.
A BEVY OF INCENTIVES IN NJ
• Business Employment Incentive Program, available to technology companies that create at least 10 new jobs and non-tech companies that create 25 new jobs.
• Business Retention and Relocation Assistance Program grants (up to $1,500 per job), which help preserve jobs in danger of being relocated out of state.
• The Edison Innovation Fund provides an integrated set of resources, including loans, tax credits and venture fund investments, designed to support tech and life science companies develop and commercialize new products.
• Clean Energy Solutions provides a suite of financing programs to support New Jersey’s Energy Master Plan; programs include interest-free loans and grants to ensure growth while reducing the state’s carbon footprint.
THE STATE EFFORT IS BEING MATCHED BY LOCAL INITIATIVES
The reinvigorated effort by state economic officials will complement ongoing initiatives at the local level that already have a proven track record of success. A good example is Jersey City’s Urban Enterprise Zone.
One-third of Jersey City is designated as an Urban Enterprise Zone, and participating UEZ businesses can charge half the standard sales tax—just 3.5%—on certain purchases. UEZ member businesses may be eligible for employee tax credits, reduced unemployment insurance, and façade rehabilitation and relocation grants. Additionally, UEZ members may apply for State of New Jersey programs such as the InvestNJ Business Grant and Main Street Business programs, and the Business Employee Incentive Program.
“In these difficult times, we are doing all we can to help businesses thrive, not just survive,” said Mayor Jeremiah Healy. Greater efforts are being made to acquaint businesses with the benefits of being located in Jersey City, especially in the City’s UEZ, one of the largest and most productive in New Jersey.
Since the establishment of the Jersey City UEZ, $81 million has been reinvested in 107 UEZ projects, generating more than $10.5 billion in capital investments. Past and ongoing projects include Streetscape Improvements; the establishment of the Special Improvement Districts (SIDS) in the Central Avenue, Historic Downtown, Journal Square, McGinley Square and Newark Avenue areas, funding that enabled Monticello Avenue Community Development Corporation to apply for and obtain “Main Street” designation; restoration of historic Apple Tree House; Closed-Circuit TV (CCTV), and the Gateway Beautification project.
Jersey City has become one of the major financial centers of the Northeastern U.S. Financial services employment in Jersey City jumped from less than 5,000 in 1980 to nearly 26,000 in 2002, an increase of 455%. This is far greater than the job increases of 78% in New Jersey and 52% in the U.S. during the same period.
DEVELOPMENT SUCCESS STORIES ARE MULTIPLYING
New Jersey economic development officials are touting several recent successes as evidence that their efforts to the improve job-creation environment are getting results, particularly with new and expanding businesses.
Waterfront Technology Center at Camden tenant IP System 3 recently formed a strategic partnership with the Camden-based Rutgers Institute for Management and Executive Development to deliver a new Project Management Dual Certificate Program. This collaboration is cited as a prime example of what the New Jersey Economic Development Authority’s Waterfront Tech Center, and the Camden Innovation Zone as a whole, were established to support.
Founded in 2005, IP System 3 focuses on developing e-learning solutions for end-users of project management software. The company moved into the Waterfront Tech Center in 2007, and around the same time became the Primavera Authorized Representative for the tri-state area. Primavera is a construction project management software solution that is designed to help corporations and public agencies plan project investments from start to finish. IP System 3 currently offers a variety of consulting and training services, utilizing the multimedia room in the Waterfront Tech Center as its classroom.
When Ray Compari, associate dean and director of the Rutgers Institute for Management and Executive Development, learned of IP System 3’s project management efforts and training programs, the synergies between the two organizations became obvious.
“We realized that IP System 3 was delivering a classroom experience that mirrored the online training programs available through the Rutgers Institute for Management and Executive Development,” said Compari. “It is always a goal of ours to build connections with Waterfront Tech Center tenants, and in this case our complementing programs resulted in this innovative and valuable partnership.”
The Project Management Dual Certificate Program combines the Rutgers self-paced online coursework in project management with a three-day classroom hands-on training experience provided by IP System 3. Organizations that need to improve project management maturity can benefit from the program’s proven project management methodologies, principles and best-of-breed tools. In addition, participants earn 83 professional development units (PDU) via the Project Management Institute (PMI), which satisfies the three-year requirement to maintain PMI credential. The program also provides 35 PDUs of project management education needed for Project Management Professional (PMP)/Certified Associate in Project Management (CAPM) certification eligibility.
The program also is valuable for unemployed professionals. The New Jersey Department of Labor and Workforce Development provides retraining grants up to $4,000 to displaced workers enrolling in Rutgers University’s professional development programs, including the Dual Certificate Program. While in training, participants can still collect unemployment insurance and may be eligible for additional benefits.
The Waterfront Tech Center is the latest in the continuing development of the Waterfront Technology Campus and a prime example of the EDA’s efforts to provide first-class, state-of-the-art facilities for growing technology companies.
The 100,000-square-foot facility has been designed to accommodate the work of businesses in the biosciences, microelectronics, advanced materials, information technology and other technology and life sciences fields. Situated along Camden’s burgeoning waterfront—a gateway to the long technology corridor that runs through New Jersey—and in proximity to other technology companies, universities and research centers, the Waterfront Tech Center offers a pool of skilled workers and access to local and regional resources.
In 2006, Princeton Power Systems was awarded a grant from the New Jersey Commission on Science and Technology (CST) to support the development of a grid-tied inverter. The project was a collaboration with university professors that resulted in the installation of solar panels on the roof of Princeton’s Engineering Quadrangle. Between 2006 and 2008, the company received additional support from the EDA, CST and the New Jersey Board of Public Utilities (BPU) to support further product development and commercialization.
In March 2009, Princeton Power Systems was awarded a Business Employment Incentive Program (BEIP) grant and an Edison Innovation Fund investment from the EDA to support its expansion and relocation to its new West Windsor facility. Most recently, the company was awarded $3.3 million through the Edison Innovation Clean Energy Manufacturing Fund (CEMF). This financing will help the company advance its second-generation grid-tied inverter, and create 90 new jobs in the process.
“The state’s support since the very beginning has been critical to our success, and our latest expansion will ensure we continue to grow and create more jobs in New Jersey,” said Marshall Cohen, chief executive officer of Princeton Power Systems.
Nistica, Bridgewater, NJ-based global supplier of agile optical modules for high bandwidth applications, also has benefited from NJEDA support. The company recently announced it has arranged $4 million in debt and equity financing with backing from Fujikura LTD, the NJEDA and RCB Bank’s Knowledge Based Industries. The funds will be used to fuel Nistica’s growth into high-volume manufacturing.
In 2007, Nistica received a $1 million Edison Innovation Fund investment from the EDA that was used for working capital and product development funds. One year later, Nistica became the second company to have a portion of its Edison Innovation Fund investment converted to preferred stock by the EDA. The conversion of 50 percent of the loan from debt to equity demonstrates the promise of this Bridgewater-based company.
“Our move from a 5,000-square-foot space to 15,000 square feet was a direct result of the EDA investment, and it will allow us to keep our momentum going,” says Nistica CEO Ashish Vengsarkar. “We have nearly doubled our staff, the majority of which are highly paid engineers, and we plan to continue this trend in the future.”
Vengsarkar adds, “The money from the EDA is great, but the leverage, the connections and the network that comes with the financing has been even more critical to our success.
When TTI Environmental, Inc. (TTI) wanted to expand the services and capabilities of their small business, they sought a new location in New Jersey that would allow them to better support their contracting and consulting services.
The shareholders of TTI obtained low-interest financing through the NJEDA. The $750,000 bank loan, backed by EDA guarantees totaling $187,500, supported TTI’s relocation to a larger, stand-alone facility in Moorestown. The new property includes 4,000 square feet of office space, 11,000 square feet of warehouse space, and five acres of secure outside storage for trucks and heavy equipment. TTI is a registered Small Business Enterprise and certified service-disabled veteran-owned small business that specializes in environmental consulting, safety and training, as well as tank management and industrial hygiene.
Ed Miller, president of Pro Tapes & Specialties, Inc., also praises NJEDA’s proactive role in assisting his company to expand.
“If not for the EDA, working in conjunction with our corporate banker, we would have never been able to realize the sales growth and expansion of the past five years,” says Miller.
Pro Tapes has worked with the EDA a total of five times to obtain more than $500,000 in loan participations to support over $2 million in total bank financing. EDA’s involvement helped to keep borrowing costs down for the manufacturer of specialty tapes.
“With the EDA’s assistance, we were able to fully fund our production expansion plan,” added Miller. “The EDA not only stepped in and provided the additional financing, but did so at an interest rate and with a payment schedule that allowed us to operate with little cash-flow disruption.”
The expansion has nearly tripled Pro Tapes’ manufacturing capacity over the five-year time period. As a result, Pro Tapes was able to add 60 new jobs and double its revenue.
When McLean Packaging was looking to relocate its facility and corporate headquarters from Philadelphia to a 100,000 square foot facility in Moorestown, the company turned to the EDA for assistance. McLean Packaging Corporation specializes in providing retail packaging and displays. The company is divided into a Corrugated Division, a Plastic Folding Box Division and a Rigid Paper Box Division. McLean’s transparent plastic box and rigid paper box plants are the largest and most diverse of their kind on the East Coast.
With a $10 million bond financing from the EDA, McLean was able to complete its relocation and help generate approximately 70 new jobs in New Jersey. With that assistance, the company was also able to fund the purchase of equipment for the new facility. McLean Packaging also executed a Business Employment Incentive Program (BEIP) grant worth an estimated $689,830 from the EDA. “Working with the EDA was a seamless process, and we could not have made the move into New Jersey without them.” said Joe Fenkel, President of the company’s Corrugated Division.
Branchburg, NJ-based Byram Labs, a producer of electric, water, and gas meters, received EDA support to provide hybrid vehicles for its sales team. The EDA worked with a partner bank to guarantee 25 percent of a $93,000 loan for the vehicles. The EDA’s involvement helped lower the bank’s credit risk and made access to capital available for Byram Labs.
CLEAN COAL IN LINDON, CARBON GAS UNDER THE SEA
In October 2008, then-Gov. Jon Corzine released an updated statewide Energy Master Plan (EMP). The EMP focuses on renewable energy and energy efficiency measures in order to increase energy security, decrease consumer costs, and reduce greenhouse gas emissions.
The EMP would reduce energy consumption 20 percent by 2020, contributing to the state’s overall greenhouse gas emissions target of 1990 levels by 2020. Implementation of the EMP would also involve the generation of renewable electricity beyond what is required by the state RPS of 22.5 percent by 2020.
Linden, NJ recently acted to do its part in the implementation of the Energy Master Plan. The Linden City County unanimously approved in January a memorandum of understanding to resolve development rights to a 106-acre property on the banks of the Arthur Kill River, which the city had previously tried to condemn for a redevelopment plan in 2005. The council’s action paves the way for a clean energy coal power plant that will create 150 permanent jobs.
PurGen is now pursuing permits to build a $5 billion, 500-megawatt electric power plant using clean-energy technology. Coal will be pressurized, rather than burned as in other power plants, and the carbon dioxide exhaust will be piped 100 miles for storage under the Atlantic Ocean.