Tag Archives: UEZ

What Development?

I heard someone who knows Millville’s development projects as well as anyone state this week that there is no building going on. Not only in Millville, but in Cumberland County. That person stated the expectation is there will be none for the next year . . . at least. No development. Period.

That is why I am perplexed by Millville’s recent decision to spend $420,000 over the next 20 months on economic development.

The city’s economic-development efforts will be handled by a private nonprofit corporation lead by an executive director who currently works for the municipality.

City Commission voted 5-0 Tuesday to approve a 20-month, $420,000 contract with the Millville Urban Redevelopment Corp.

If the expectation is that nothing will be developed for at least 12 months, why the hell should the taxpayers fund $420,000? I am quite aware that UEZ funds are being used. UEZ funds are tax dollars we spent in the area. Surely, that money could be better spent than paying two former municipal employees for 20 months.

This is why the general public has become incredulous.

Waterfront Marina Created No Jobs

In researching where the funds to build the Waterfront Park Marina came from, I learned that $250,000 was from an Urban Enterprise Zone (UEZ) grant.

The UEZ is a controversial program. Designated zones are permitted to charge half the state sales tax on purchases. Furthermore, the collected taxes are not sent to the state, but are kept within the zone and distributed to build business. The idea is that blighted areas are provided an opportunity to revitalize itself.

When one visits the New Jersey UEZ site, he reads the mission of the program:

The UEZ Program was created to foster an economic climate that revitalizes designated urban communities and stimulates their growth by encouraging businesses to develop and create private sector jobs through public and private investment.

So Millville applied for and was given a $250,000 grant from the local UEZ to build the marina. The job was completed by a firm from Gaithersburg, MD. There is no dockmaster or any other employee associated with the public marina. What business was developed because of the UEZ money spent on this project?

Bad Politics

For a few years I left the classroom to be a technology coordinator for my school district. It was a job I enjoyed and at which I excelled. All the while, I knew my position was always tenuous. It’s not that my work wasn’t appreciated, it was that funds to pay for the position came from the state via the Abbott decision. Any reasonable person could see that those funds would dry up at some point. When they did, the position would be eliminated. When money began drying up with flat funding from Trenton a number years ago, out I went.

For years municipalities have funded police and fire employee salaries with Urban Enterprise Zone funds. Districts are created that permit businesses with more than 20 employees to charge half the state income tax on purchases and services. The sales tax is then kept in the community. That money is then used to help businesses. I wrote about UEZ four years ago.

Millville has been using some of those UEZ funds ($500,000 annually) to fund police and fire officers. Now that funds are tight (UEZ funds have been commandeered for the balance of the year by state government), Millville is faced with how to pay these officers.

With no UEZ funds available for the salaries, the only other “revenue” Millville has is the general fund. That fund has been promised to be flat this year by the City Commission. No one wants to raise taxes in this climate. Indeed, it would be political suicide.

So, Millville is faced with losing nine police employees. The police union is understandably not pleased:

“We’re willing to work with the city,” he said. “They’re putting the deficit all on the city employees. I don’t want to see the department go down the drain.”

That is certainly not fair! Reasonable people could see that if these funds ever dried up so would the salaries. It is that time.

Who is responsible for funding the salaries through UEZ?

No one desires reducing our public safety. The number of shootings in town just this week gives residents pause.

The thing is, raising taxes to make up for the bad politics that created this situation is not a reasonable solution. Funding salaries out of UEZ money may have been legal and expedient, but it wasn’t smart. The town is now in a bind. It is wrong to frame the issue as an either/or scenario even if that is how it is played out.

Again, who created this situation?

Last spring Commissioners Quinn and Derella touted their 12 year legacy as to why they should be re-elected. Likewise, Mayor Shannon spoke of his eight years in office. Together, the “Three Js” represented incumbency. Guys, if you want the accolades for what you did, you need to take the heat when it fails. Funneling UEZ funds for salaries has now caught up with you. I agree with your no tax increase stance. The flip side, however, is that you cannot take credit for the increased public safety force since it will decrease.

Perhaps these decisions reach back to when Mr. Finch was previously a commissioner. Does anyone know?

Unfortunately for Millville, Commissioner Vanaman, who up until now was perceived to be the fiscally responsible member, has come out in favor of at least a 6.5¢ tax increase to rectify the bad politics of his colleagues. As much as we desire all our police and firefighters, there is no justification for raising property taxes this year. This stance of his hurts his credibility in my eyes.

I want a strong police force and fire department. Funds should be permanent to support those departments. Making decisions to use tax “revenue” specially designed to generate business is not smart. This isn’t a new issue; we have all seen this coming.

Hold the decision-makers responsible.

Van Drew: Much Ado About Nothing

Every day state senator Jeff Van Drew is in the news. Van Drew will try hard for constituents. Van Drew wants to name a road. Van Drew wants to save the puppies. This media hound knows what works. He has turned this strategy into a political career.

Today’s headline is Van Drew planning hearing to save UEZs. The unnamed article claims the self-promoter will be holding hearings “to discuss the devastating impact of the potential loss of the UEZ program.”

Nothing like rigging the hearing ahead of time.

My question is whether or not the hearing is even warranted. According to Vineland/Millville UEZ site:

The Urban Enterprise Zone Program is a twenty-year program created by the State of New Jersey as a tool to create economic development and employment in distressed cities. The Vineland/Millville Zone is one of twenty-seven zones in New Jersey. Vineland and Millville became active in the Urban Enterprise Zone Program in April 1986.

Van Drew claims his hearing is needed.

“We need to hear the success stories, as well as the shortcomings throughout the state,” he said. “This program has tremendous potential to help bring New Jersey out of this current economic crisis.”

Van Drew has been around as a public servant since 1983. Does Van Drew not know the success stories already? Why squander public time and money on this? That’s right, more headlines. It’s what Van Drew does best.

We all know nothing will come of the hearings.

Back in 2004, Van Drew called another meeting regarding Dallas Airmotive. We’re still waiting on the new tenant there.

Van Drew is ineffective for his constituents.

Van Drew Burdens Taxpayers

If ever there was a bill that highlighted what is wrong with government in New Jersey, A4359 is it.

First, a little background. New Jersey has an Urban Enterprise Zone (UEZ) program. The idea of UEZs is to re-distribute wealth. Various low-income communities throughout the state participate. There were certain criteria each UEZ had to meet, but once met, the agency established is funded with millions of tax dollars to help business grow. The UEZ boards distribute these funds on projects it sees fit in grants and low-interest loans.

Furthermore, the state has permitted any business within the UEZ that has 20 or more employees to charge half the state sales tax. That is correct; buy goods in an UEZ and one only pays 3% sales tax. Buy the same product in an a non-UEZ store in a neighboring community, you pay 6%. The 3% collected does not go into the state coffers either. It remains in the UEZ for other projects. That means sales tax from UEZ businesses does not go to Trenton. How’s that for re-distributing wealth?

Millville in Cumberland County is a UEZ. From the surface, good things have occurred with the local UEZ money. Downtown Millville is being restored, there are new businesses, and one gets a general sense that the town is on the correct path.

The big news out of Millville in recent years is the proposed motorsports park that is going to be built next to the municipal airport. We won’t get into the noise issues or the traffic congestion. We won’t touch on the tardiness of the developer to make payments, the loss of wooded areas, or a re-adjustment of the number of full-time local jobs the park will provide.

No, the issue today is that Assemblyman Jeff “I sponsor every bill there is” Van Drew rammed the most idiotic bill through the Assembly yesterday. We first mentioned this bill in December.

A4359 allows the motorsports park to charge more taxes than any other UEZ business. That’s right, customers of the motor track will pay 5% on the goods they purchase, not 3%.

A governing body that establishes a sports and entertainment district (ed. Only this proposed motorsports track qualifies) may, as part of the ordinance establishing the district, assess any or all of the following taxes: (1) an additional two percent tax on sales within the district of tangible personal property subject to taxation under subsection (a) of section 3 of P.L.1966, c.30 (C.54:32B-3); (2) a two percent tax on sales within the district of food and drink subject to taxation pursuant to subsection (c) of section 3 of P.L.1966, c.30 (C.54:32B-3); (3) a two percent tax on hotel rooms occupied within the district and subject to taxation pursuant to subsection (d) of section 3 of P.L.1966, c.30 (C.54:32B-3); and (4) a two percent tax on admission charges to places of amusement within the district and subject to taxation pursuant to subsection (e) of section 3 of P.L.1966, c.30 (C.54:32B-3).

This is a time of fiscal restraint. It is a time when state government is severely short on money. The governor has proposed raising the sales tax, put off property tax reform, and indebted the taxpayer for three decades to provide road money for a mere five years while municipal governments are scurrying around trying to assemble budgets to pay for needed services (like police protection) that Corzine has refused to pay for with state funds. Taxpayers are going to be paying a lot more next year to live in New Jersey.

And Assemblyman Van Drew just added to the load. A4359 will put more of a burden on the already taxed citizen.

Dear reader, the extra 2% that will be charged at New Jersey Motorsports Park is not for government use (although there is certainly the opportunity for slippage). Rather, it will sit in a fund for the developer! The developer will be able to leverage loans off that pot of money.

Eighty percent of the $100 million park will be be financed by taxpayers. I wonder if I opened a store if I could get the government to finance 80% of the upstart costs. Could you, dear reader?

Van Drew has pimped for the developer of this project and convinced his buddies in the Assembly to go along with it.

While I am a Millville resident, if we can afford to pay more in sales tax, then it is time for the UEZ designation (and all the perks associated with it) to go away. This is absolutely ludicrous! A special tax should not be able to be levied that is to be used by a (out-of-state) company.

NJ Towns to Raise Taxes to Manage Money for Developers

The racetrack in Millville is a go. A couple months ago a deal was made between the city and Citizens United, the environmental group that had challenged the project. We have remained skeptical of the project, but admittedly for selfish reasons. We live near the planned park and are concerned about the noise and the traffic. We have been assured (but with no consequence if the assurers are wrong) that the noise will not be an issue. We hope so. The traffic will be a mess. With only one pass over the Maurice River and traffic already bottlenecking during rush hour, traffic will only be worse on racing days, which will be plenty.

But today is further news on the project. Millville is trying to ram a bill through the state legislature to raise taxes. This bill would enable towns in the Garden State to declare certain areas sports and entertainment districts. So, if Millville gets its way, it will declare Thunderbolt Raceway a sports and entertainment district.

So what? Well, that would allow everything sold at the racetrack to be taxed two cents higher than elsewhere. Millville is an Urban Enterprise Zone. As such, it gets to reduce the state sales tax from six cents to three cents. The reason behind this is to spur business in these areas. There are restrictions. I believe a business needs to have 20 or more employees. Auto and home sales are not part of this. Anyhow, there are severe tax breaks provided to many communities in this state to spur the economy. Mind you, neighboring towns suffer because of it and are none too happy either.

So, Millville receives all these tax breaks and is now fighting for methods to raise taxes. It is illogical. But so be it. It will have more money to help re-energize the town. That is a good thing. But that is not what will happen. No, this has nothing to do with helping out the town of Millville. The taxes collected would be held by New Jersey Economic Development Authority. After it holds it (and uses it for leverage to indebt us more?), the money will be returned to the proprietors of the racetrack. Huh?

Our “favorite” freeholder, Lou Magazzu, said,

By supporting the Sports and Entertainment District legislation, the N.J. Motorsports Park is sure to be an unqualified success.

Magazzu is no longer at war with the citizens of Millville, but he is bloviating just the same. How does collecting the money for the business only to return it later create a success?

Dear reader, this is yet another example of slippage, a favorite topic of ours here at eCache. If this bill is really to help out the developer as it is purported, taking the money from their hands does not do it. Allow the developer to charge whatever price he chooses (without the added taxes) and pocket the money immediately. That will permit the ROI to be more immediate than developing a program to collect, count, and re-distribute the money to the developer at a later date. We all know there will be fewer dollars returned than collected. Slippage (the measure of inefficiency of the program) is what government spends on managing the money for the developer.

This is a bad idea on every front. It is bad for taxes to be raised. It is bad for government to collect more money. It is bad for government to administer a program for a private business. It is bad for the developer to lose control of his money. It is bad for the customers of the racetrack. Folks, this is not leadership.