Gov. Phil Murphy said he plans to unveil five grants of $100,000 each to municipalities that develop the best “game plans” on how towns and cities take advantage of the newly unveiled federal opportunity zones, which lets investors offset and potentially eliminate taxes on their investment returns.
New Jersey has 169 zones spanning 75 cities and towns, mostly in urban areas, and investors, developers and local officials have begun viewing them as profitable ways to redevelop the state’s poorest urban regions. Investors would not have to pay any taxes if they keep the investments in those communities for at least 10 years.
“The opportunity to defer capital gains or ultimately expunge them completely if you hold them long enough, that is a big deal,” Murphy said at Choose New Jersey’s New Jersey Opportunity Zone Summit Monday afternoon in New Brunswick. “There’s an unmistakable amount of capital that wants to play here.”
The grants would go to local nonprofits or governments to actually put those plans into action, according to the governor.
“How do you see [these zones]? Is it affordable housing, is it commercial, retail, is it businesses that we want to attract?” Murphy said.
Murphy tacked on the opportunity zones to his economic incentive master plan, unveiled last October, aimed at replacing the Christie-era tax break and ways in which the administration encourages businesses to set up shop in New Jersey.
Towns across the state have been eyeing just how their local governments can tap into the potentially unlimited revenue source.
Those businesses and investors, according to New Jersey Redevelopment Authority President and CEO Leslie Anderson, are only in it for the money and capital gains tax deferral, and not necessarily whether it would benefit the local community.
The jobs of town governments is to change that, Anderson said. Most private businesses and funds are likely eyeing the three most well-known cities, she said: Jersey City, Newark and New Brunswick.
“Our job is to help the investor understand the value and importance at looking at all of the designated zones in the 75 municipalities in the state of New Jersey,” Anderson said.
Many towns can dangle local incentives such as payments in lieu of property taxes or an expedited permit approval process, according to Plainfield Mayor Adrian Mapp.
Many onlookers of the federal opportunity zones, including Mapp, worried that the zones would lead to investment in pricy projects that would gentrify neighborhoods and push out many longtime residents and businesses.
Aisha Glover, president and CEO of the Newark-based nonprofit Newark Alliance, which has been viewed as a standard-bearer in the state for economic revitalization, pointed to a number of ways local city employed to avoid the city’s gentrification.
They include efforts to push businesses which open shop in Newark to hire a certain percentage of Newark residents, buy and contract local goods and services based in the city, and encourage employees to live in Newark.
“What are your processes and is it embedded to think about resident involvement and community engagement [and] making sure community folks actually have an opportunity?” Glover asked.
“We’re not anti-development. But we do want to think for more strategically to ensure no one is displaced from that development,” she added.
Chris Paladino, president of the New Brunswick Development Corp., highlighted some of the assets in New Brunswick which the city can promote – which also has opportunity zones – including Rutgers University and RWJ University Hospital.
Many city and business officials, and local developers have been eyeing one site that could benefit from the federal opportunity zones: a massive empty lot across the street from the New Brunswick, called the The Hub@New Brunswick, which was also included in Murphy’s economic master plan from October.