Gov.’s veto leaves UEZ up the creek

By Ron Leir 

Observer Correspondent 


Farewell, Farmers’ Market? No more Doggie Halloween Pawrade?

Maybe sooner than you think.

Kearny’s Urban Enterprise Zone (UEZ) program, which sponsors those events, has been left on life support, now that Gov. Chris Christie has squelched a legislative proposal to revive its funding.

Kearny is the only community in The Observer’s coverage area which has a UEZ, of which there are 32 around the state.

Businesses in designated UEZ zones continue to offer a 3.5% sales tax (discounted from 7%) to their customers and are still eligible for low interest loans for tax-free capital improvements or equipment purchases but some four years ago, Christie froze the return of the sales tax balance to UEZ municipalities.

From that point on, those municipalities could no longer tap that revenue flow to facilitate improvements or services designed to benefit the local business district.

Assembly Speaker Vincent Prieto (D-Secaucus) sponsored a bill (A3952) which would have restored 30% of the sales tax to a UEZ assistance fund for municipal use but Christie vetoed it, preferring to deposit the entire tax revenues – projected to reach $287 million by 2018 – into the state budget.

“We’re disappointed,” Mayor Alberto Santos said. “Kearny’s UEZ program will be running out of funds and this will have an impact on future business investment and job creation.”

The UEZ concept came about in 1983 under legislation signed by Republican Gov. Thomas Kean to help offset the impact of many mom and pop businesses in urban communities being supplanted by suburban malls.

Three years later, Kearny formed its UEZ with the aim of reviving the Kearny Ave. business district and other outlying commercial areas and Town Council President Carol Jean Doyle credited local UEZ Director John Peneda with “parlaying our UEZ receipts to best use” to keep small businesses afloat.

“Now you see some empty store sites along Kearny Ave. but John Peneda has worked hard to get people to shop locally at a time when we need it the most,” said Doyle.

And while Kearny’s UEZ – like its counterparts around the state – can no longer rely on annual replenishments of its fund, the program has been functioning – on a more limited basis – with accumulated reserves of about $1.8 million. Today, there are 160 local businesses registered in the UEZ.

For 2015, the UEZ board, with consent from the town’s governing body, had budgeted $137,000 – money left over from its project fund account for the lion’s share (the town paid the rest) of three walking cops for Kearny Ave. and a sweeper and driver to clean Kearny Ave.

However, the actual costs came to about $160,000 for the cops plus $96,000 for the clean sweep for a total of about $256,000, putting the account about $119,000 in the hole, Peneda said. “That meant, for the first time, we had to dip into our reserves.”

“If no new funding comes in [via state legislation],” Peneda said, “we may have to put the brakes on these projects or cut back in some way, like reducing the number of cops we pay for.”

As for projects that have come to be consistently associated with UEZ sponsorship, such as the Kearny calendar, Kearny magazine, the Farmers’ Market and Town-Wide Yard Sale, Peneda said those are being paid for though a separate account for town marketing programs, “for which we have about $35,000 left.”

However, he said, there is no money available at this point to pay for Christmas tree lighting and decorations and it’s likely the UEZ board will be coming before the Town Council by mid-year to request a new allocation.

Peneda said the UEZ has “close to $240,000” allocated for loans to UEZ businesses offered at an interest rate of 4.5% for capital improvements and/or equipment purchases for those businesses. “We’re still getting some money back on outstanding loans,” he said.

Back when the town’s UEZ was still receiving annual sales tax revenues, Peneda said that, “$3 million a year [in new revenues] was probably a high point for us.”

During the program’s first decade, “66% of our projects – which accounted for expenditures of $19 million – were for brick and mortar items such as the Kearny Ave. streetscape and paving and the Seller St. storm water drainage,” he said.

Without a renewal of annual funding cycles, however, eventually the well will run dry, Peneda conceded. “It all depends on what our board does. If they decide to continue full funding of our existing projects, we might last four or five years. If they cut back, maybe we’ll last seven or eight years.”

Here’s what UEZ looks like now

What are Kearny’s Designated Zone boundaries?

The Zone is approximately 1,193 acres, 1.86 sq. mi. or 20% of Kearny’s landmass.

Essentially, it consists of all, or parts of: the South Kearny Peninsula, Kearny/ Passaic/Midland/Schuyler Avenues, the Belleville Turnpike, Newark-Jersey City Turnpike (Harrison Ave.), the Sellers/O’Brien Street area, and areas east of Schuyler Ave.

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