N.J. Admin. Code § 19:31B-1.1

Current through Register Vol. 56, No. 12, June 17, 2024

Section 19:31B-1.1 - Program description

(a) The Authority is empowered to make direct loans to applicants that are unable to obtain funding from conventional sources even with the help of an Authority guarantee.

(b) Except as otherwise provided in this subsection, direct loans are available in a maximum amount of $ 2,000,000 for fixed asset financing and $ 750,000 for working capital.

1. For the Smart Growth Pre-development Loan Program, the maximum loan amount will be $ 1 million.

2. For the Brownfields Loan Program, the maximum loan amount will be $ 5,000,000 and the minimum shall be $ 100,000.

3. The maximum amount of combined total financing under the Smart Growth Pre-development and Brownfield Redevelopment loan program(s) is $ 1.0 million.

4. The maximum amount of total financing for the New Jersey Growth Fund Program shall be $ 1 million per transaction.

5. For the urban loan product, the maximum loan amount will be $ 3 million, not to exceed 50 percent of the total project costs, for those projects wherein the tenant or owner will provide from non-Authority sources a capital investment of under $ 70 million; and $ 5 million for those projects wherein the tenant or owner will provide from non-Authority sources a capital investment of over $ 70 million.

6. For the Edison Innovation Angel Growth Fund, the Authority may award up to $ 250,000 in convertible debt financing to leverage private angel investments, on a two to one angel matching fund requirement, to a business that has generated a minimum of $ 250,000 in prior 12-month commercial revenues; for the Edison Innovation VC Growth Fund, the Authority may award up to $ 1 million in convertible debt financing to leverage institutional venture backed investments or strategic investments that may be made by a variety of sources, including, but not limited to, commercial or institutional entities, nonprofit organizations with a similar focus, or universities, all of whom are interested in providing funding to advance the business in which they invest, on a one to one matching fund requirement, to a business that has generated a minimum of $ 500,000 or for the Edison Innovation Angel Growth Fund a minimum of $ 250,000 in prior 12-month commercial revenues; and, for the Edison Innovation Growth Stars Fund, the Authority may award up to $ 500,000 in convertible debt financing, on a one to one matching fund requirement, to a business that has generated a minimum of $ 2 million in prior 12-month commercial revenues. Except as otherwise provided, the total amount of assistance that a business may receive under the various programs funded by the Edison Innovation Fund, or any similar assistance provided by any other State agency, shall not exceed $ 1 million dollars. Notwithstanding the foregoing, any amount received by a business under the Edison Innovation Growth Stars Fund, Edison Innovation Clean Energy Manufacturing Fund, and Edison Innovation Green Growth Fund, shall not be considered in the $ 1 million dollar limit.

7. For the Loans to Lenders component of the Fund for Community Economic Development, the maximum loan amount will not exceed $ 750,000, except that Loans to Lenders may be used to develop grocery stores and supermarkets with a maximum loan amount of $ 3 million, provided that no more than $ 4 million will be used for this purpose. For the pre-development assistance component of the Fund for Community Economic Development, the maximum loan amount will not exceed $ 50,000 per project.

8. For the Real Estate Impact Fund:

i. The maximum loan amount for a developer or business will be $ 3 million, not to exceed 25 percent of the total project costs; and the total amount of public assistance that a developer or business may receive shall not exceed 50 percent of the total project costs; and

ii. The maximum loan amount for a municipality will be $ 750,000; the loan amount for a municipality shall be the lesser of 100 percent of the total project costs or the property's appraised value in its remediated state, divided by 120 percent, rounded to the nearest one hundred dollars.

(c) Proceeds of fixed asset loans can be used for the acquisition of land, buildings, machinery and equipment, the expansion of an existing building or the renovation of machinery, equipment, and buildings.

(d) Proceeds of working capital loans can be used for refinancing of existing debt, purchase of inventory, or operating expenses.

(e) Proceeds of Smart Growth Pre-development loans shall be used for the purposes of pre-development site preparation costs to be determined by the Authority. Such costs may include, but are not limited to, land assemblage, demolition, removal of materials and debris and engineering costs.

(f) Proceeds of Brownfields loans shall be used for financing those costs not duplicative of other approved State or Federal grants previously awarded for the proposed use of funds and associated with the remediation project, including, but not limited to: soil, groundwater, and infrastructure investigation, assessment, and remediation; abatement; hazardous materials or waste disposal; long-term groundwater remediation, natural attenuation, or other forms of engineering and institutional controls; building and structural remedial activities, including, but not limited to, demolition, asbestos abatement, polychlorinated biphenyl removal, contaminated wood or paint removal, or other infrastructure remedial activities; attorney fees; and planning, engineering, and environmental consulting. Not more than 20 percent of the brownfields loan may be used for soft costs.

(g) Proceeds of urban loans shall be used for fixed asset financing as set forth at (c) above, not to exceed 50 percent of total project costs, in the nine urban centers designated in the New Jersey State Development and Redevelopment Plan (Atlantic City, Camden, East Orange, Elizabeth, Jersey City, New Brunswick, Newark, Paterson and Trenton).

(h) Proceeds of Real Estate Impact Fund loans may be used by a developer, business, municipality, local redevelopment agency, or county improvement authority for eligible project development costs within municipalities qualified to receive assistance under P.L. 1978, c. 14 (N.J.S.A. 52:27D-178 et seq.) or by a developer or business within Fort Monmouth or as part of New Jersey university/college sponsored projects that include public-private partnerships that promote emerging technologies or industries.

(i) The Authority shall determine the term, and fixed and/or variable rates of interest, including interest rate floors, to be charged for each loan product through consideration and official action of the Members at a public hearing. The applicant shall elect in writing, at or prior to the time of closing, a fixed interest rate or a variable interest rate.

1. Fixed Rate Interest: Interest on fixed asset or working capital loans will be fixed at the time of closing, with a floor that shall be indexed to a nationally recognized financial index, such as the five-year United States Treasury Bond of like term, plus or minus any additional basis points to be determined by the Authority. During the term of any loan, a scheduled rate reset shall not result in an increase of more than five percentage points greater than the original calculated interest rate.

2. Variable Rate Interest: Interest on fixed asset and working capital loans will be set with a floor that shall be indexed to a nationally recognized rate, such as the Prime Rate as published in the Wall Street Journal at the time of closing, plus or minus any basis points to be determined by the Authority. The interest rate will be variable, adjusted on the first business day of each calendar quarter in accordance with the relationship of the original calculated interest rate. The maximum increase in the variable interest rate during the term of the loan will be no more than five percentage points greater than the original calculated interest rate.

3. For fixed and variable rate loans, factors to be considered in establishing additional interest rate basis points above the floor previously established by the Board may include, among others:

i. An applicant's creditworthiness;

ii. Amortization schedules;

iii. The quality of collateral; and

iv. The number of full-time jobs created or maintained in New Jersey provided the Authority's exposure may not exceed $ 65,000 per job created or maintained.

4. For loans offered under the Edison Innovation Fund, the criteria for determining the rate of interest and additional basis points above the floor previously established by the Board may include the eligibility standards contained at N.J.A.C. 19:31B-1.2(f).

5. In addition to any interest charged on an Edison Innovation Angel Growth Fund loan, an Edison Innovation VC Growth Fund loan, and an Edison Innovation Growth Stars Fund loan, the Authority may also require the payment of additional fees and charges, including, but not limited to, warrants, stock, stock options, a percentage of royalties, and a percentage of sales proceeds.

6. The rate of interest for Real Estate Impact Fund loans shall be determined by the economic feasibility and economics pertaining to the return on investment and the ability to attract the required investment; and full repayment shall be due and payable to the Authority at the earlier of the end of the loan term or a liquidity event, on terms and conditions mutually agreed upon based on the structure and merits of the project.

7. For Brownfields loans, full repayment shall be due and payable to the Authority at the earlier of the end of the loan term or upon closing of construction financing. The interest shall be fixed and shall be determined by the economic feasibility and economics pertaining to the return on investment and the ability to attract the required investment. The Authority, at its sole discretion, may reduce the rate of interest based on factors associated with the redevelopment project's projected societal benefits and contribution to the economic development of the municipality and the areas to be affected by the redevelopment project as determined by a review of the redevelopment project design; such factors may include, but are not limited to:

i. The redevelopment project has been designed as a mixed-use residential project consisting of newly constructed residential units where the developer will reserve at least 20 percent, but not more than 50 percent, of the residential units constructed for occupancy by low- and moderate-income households with affordability controls as required under the rules of the Council on Affordable Housing;

ii. The brownfield site is in an urban food desert community and the redevelopment project design includes a food delivery source, which means access to nutritious foods, such as fresh fruits and vegetables, through grocery operators, including, but not limited to, a full-service supermarket or grocery store, or other healthy food retailers of at least 10,000 square feet, including, but not limited to, a prepared food establishment selling primarily nutritious ready-to-serve meals;

iii. The redevelopment project design includes a health care or health services center with a minimum of 10,000 square feet of space devoted to primary health care or health services and is located in a distressed municipality with a Municipal Revitalization Index score of 50 or lower;

iv. The redevelopment project has been designed as a tourism destination project, which means a non-gaming business facility that will be among the most visited privately owned or operated tourism or recreation sites in the State, and which has been determined by the Authority to be located in an area appropriate for development and in need of economic development incentive assistance. A tourism destination project shall include a non-gaming business facility within an established tourism district with a significant impact on the economic viability of that district;

v. The redevelopment project design includes an electric vehicle charging station installation in at least 25 percent of the parking spaces to be located at the redevelopment project;

vi. The applicant demonstrates to the Authority that the parking area to be located at the redevelopment project is capable of conversion to commercial space if there is a decrease in demand for parking; and/or

vii. The redevelopment project has been designed to include an incubator facility or collaborative workspaces.

8. The Authority shall provide public notice of the loan terms and interest rates, including interest rate floors, to be charged for all loan products as authorized by the Members through, among other methods, listing on the agency's website at www.njeda.com.

(j) For New Markets Loans:

1. The maximum amount of total financing for a New Markets loan is $ 10 million, except for projects that provide extraordinary economic development benefits when the maximum amount of total financing for a New Markets loan is $ 25 million.

2. For New Market Loans, the projects must be located within areas designated for smart growth land use development and designated by the New Jersey Development and Redevelopment Plan as in Planning Areas One or Two or in a designated center or endorsed plan. Additionally, projects must be located in communities and census tracts as approved by the Community Development Financial Institutions Fund (CDFI) as described at (j)2i, ii, and iii below and must have at least one of the characteristics described at (j)3 below.

i. A poverty rate of at least 20 percent;

ii. In the case of a tract not located within a Metropolitan area as defined by the United States Census, where the median income family income for such tract does not exceed 80 percent of the Statewide median family income; or

iii. In the case of a tract located within a Metropolitan area, where the median family income for such tract does not exceed 80 percent of the greater of Statewide median income or the Metropolitan area median family income.

3. Additionally, New Markets loans must be located in at least one of the following types of designated areas:

i. CDFI Hot Zone, Empowerment Zone, Renewal Community, HOPE VI Redevelopment area or Small Business Administration HUB Zone;

ii. A brownfield redevelopment area, locally designated redevelopment area, or New Jersey Urban Enterprise Zone;

iii. A census tract with an unemployment rate of 1.5 times the national average; or

iv. A census area with a poverty rate greater than 30 percent or with median incomes of less than 60 percent of the area median income.

4. In addition to any interest charges on a New Markets loan, the Authority shall also require the payment of additional fees, including a one-time monitoring fee of $ 1,000 and a management fee of five percent of the loan amount, with the exception of non-profit borrowers that will be charged a 3.5 percent management fee.

(k) For Small Businesses, Minorities' and Women's Enterprises loans:

1. Of the financial assistance allocated by the Authority from the funds made available pursuant to the provisions at N.J.S.A. 5:12-181, 50 percent shall be made available to women, and 50 percent shall be made available to minorities and all such funds shall be invested in accordance with the geographic restrictions established at N.J.S.A. 5:12-181;

2. Of the financial assistance allocated by the Authority from sources other than those funds made available pursuant to the provisions at N.J.S.A. 5:12-181, 50 percent shall be made available to small businesses, 25 percent shall be made available to minorities, and 25 percent shall be made available to women;

3. For the purposes of financial assistance provided by the Authority pursuant to this subsection:

i. A small business is a business which has its principal place of business in the State, is independently owned and operated, has 100 or fewer full-time employees, and at least 51 percent of the beneficial ownership of the business is held by persons other than minorities or women and the majority of the management of which is other than minorities or women;

ii. A minority business is a business in which at least 51 percent of the beneficial ownership of the business is held by minorities and the majority of the management are minorities; and

iii. A women's business is a business in which at least 51 percent of the beneficial ownership of the business is held by women, and the majority of the management are women; and

4. Each application for a loan shall be accompanied by any proof of certification by a public entity which certifies that the business is beneficially owned by, and that the majority of the management are, minorities or women.

N.J. Admin. Code § 19:31B-1.1

Amended by R.1992 d.126, effective 3/16/1992.
See: 24 N.J.R. 177(b), 24 N.J.R. 970(b).
Revised (e).
Amended by R.1995 d.435, effective 8/21/1995.
See: 27 N.J.R. 2377(a), 27 N.J.R. 3216(a).
Amended by R.1997 d.270, effective 7/7/1997.
See: 29 N.J.R. 1485(b), 29 N.J.R. 2844(b).
Added (g) through (i).
Amended by R.2000 d.297, effective 7/17/2000.
See: 32 N.J.R. 1705(a), 32 N.J.R. 2602(c).
In (g)1, substituted "or" for "and" following "industry".
Amended by R.2001 d.242, effective 7/16/2001.
See: 33 N.J.R. 1567(a), 33 N.J.R. 2495(b).
In (b), substituted "$ 750,000" for "$ 500,000" and "$ 500,000" for "$ 250,000"; in (g) and (h), substituted "$ 750,000" for "$ 500,000".
Amended by R.2002 d.223, effective 7/15/2002.
See: 34 N.J.R. 1247(a), 34 N.J.R. 2469(a).
Rewrote (e).
Amended by R.2002 d.333, effective 10/7/2002.
See: 34 N.J.R. 2412(a), 34 N.J.R. 3531(a).
Rewrote (e).
Amended by R.2004 d.94, effective 3/1/2004.
See: 35 N.J.R. 5047(a), 35 N.J.R. 5369(a), 36 N.J.R. 1198(b).
Rewrote (e).
Amended by R.2004 d.346, effective 9/20/2004.
See: 36 N.J.R. 2305(a), 36 N.J.R. 4321(a).
Rewrote the section.
Amended by R.2005 d.274, effective 8/15/2005.
See: 37 N.J.R. 1714(a), 37 N.J.R. 3058(a).
In (b), added 4; rewrote (g) and (h).
Amended by R.2005 d.319, effective 9/19/2005.
See: 37 N.J.R. 2153(a), 37 N.J.R. 3722(a).
In (b), added 4; in (g)1 added iv.
Amended by R.2006 d.242, effective 7/3/2006.
See: 38 N.J.R. 1563(a), 38 N.J.R. 2887(c).
Inserted "at least the first seven years of" in (g)1iv.
Amended by R.2006 d.369, effective 10/16/2006.
See: 38 N.J.R. 3001(a), 38 N.J.R. 4503(a).
Deleted (b)5 and (g)1iv; deleted the last sentence of (h); and added (l).
Amended by R.2008 d.89, effective 4/7/2008.
See: 39 N.J.R. 5071(a), 40 N.J.R. 1927(b).
In the introductory paragraph of (b), substituted "$ 1,250,000" for "$ 750,000" and "$ 750,000" for "$ 500,000"; in the introductory paragraph of (i), substituted "$ 1,250,000" for "$ 750,000" twice; and in (j), substituted "$ 1,250,000" for "$ 750,000".
Amended by R.2008 d.90, effective 4/7/2008.
See: 40 N.J.R. 110(a), 40 N.J.R. 1928(a).
Added (b)5 and (b)6; added new (g); recodified former (g) through (l) as (h) through (m); in the introductory paragraph of (h), substituted "(h)1" for "(g)1" and "(h)2" for "(g)2"; added (h)1iv and (h)1v; in (h)2, substituted "(h)1" for "(g)1"; in (h)3, inserted "or Edison Innovation R&D Fund" and "and incentives"; in (i), substituted "amortization may be" for "repayment schedule is usually" and "longer" for "shorter", and inserted "the use of proceeds and"; in (k), substituted "(j)" for "(i)" and "(j)2" for "(i)2"; in (l), substituted "(j) and (k)" for "(i) and (j)"; and in the introductory paragraph of (m)4, substituted "(m)4i" for "(l)4i" and "(m)5" for "(l)5".
Amended by R.2008 d.271, effective 9/15/2008.
See: 40 N.J.R. 2659(a), 40 N.J.R. 5247(a).
Rewrote (h); deleted former (i); recodified former (j) through (m) as (i) through (l); in (j), substituted "(i)" for "(j)" and "(i)2" for "(j)2"; in (k), substituted "(i) and (j)" for "(j) and (k)"; deleted (l)2 and (l)3 and recodified former (l)4 through (l)6 as (l)2 through (l)4; in the introductory paragraph of (l)2, substituted "Loans" for "loans", "in" for "is" following "Two or", "tracts" for "tracks", "(l)2i" for "(m)4i" and "(l)3" for "(m)5".
Amended by R.2008 d.294, effective 10/6/2008.
See: 40 N.J.R. 3980(a), 40 N.J.R. 5845(c).
Rewrote (b)5.
Amended by R.2009 d.139, effective 4/20/2009.
See: 41 N.J.R. 394(a), 41 N.J.R. 1891(a).
Added (b)7.
Amended by R.2010 d.178, effective 8/16/2010.
See: 42 N.J.R. 904(a), 42 N.J.R. 1900(b).
Added new (h)3ii; and recodified former (h)3ii through (h)3ix as (h)3iii through (h)3x.
Amended by R.2010 d.285, effective 12/6/2010.
See: 42 N.J.R. 2019(a), 42 N.J.R. 2969(a).
Added (m).
Amended by R.2011 d.195, effective 7/18/2011.
See: 43 N.J.R. 955(a), 43 N.J.R. 1602(b).
Rewrote (b)6 and (h)1; and in (h)5, substituted "Edison Innovation Angel Growth Fund loan, an Edison Innovation VC Growth Fund loan, and an Edison Innovation Growth Stars Fund loan" for "Edison Innovation R&D Fund loan,".
Amended by R.2012 d.101, effective 5/21/2012.
See: 44 N.J.R. 433(a), 44 N.J.R. 1644(a).
In (b)7, substituted "$ 750,000" for "$ 500,000".
Amended by R.2013 d.036, effective 2/19/2013.
See: 44 N.J.R. 2944(a), 45 N.J.R. 359(b).
In (b)6, substituted "$ 1 million" for the second occurrence of "$ 500,000" and inserted the last two sentences.
Amended by R.2013 d.082, effective 6/3/2013.
See: 45 N.J.R. 457(a), 45 N.J.R. 1413(b).
In (b)6, inserted "or strategic investments that may be made by a variety of sources, including, but not limited to, commercial or institutional entities, nonprofit organizations with a similar focus, or universities, all of whom are interested in providing funding to advance the business in which they invest".
Amended by R.2014 d.187, effective 12/15/2014.
See: 46 N.J.R. 1682(a), 46 N.J.R. 2420(a).
In the introductory paragraph of (b), substituted "$ 2,000,000" for "$ 1,250,000"; rewrote (h)3; deleted former (i) through (k); recodified ( l) as new (i); in the introductory paragraph of (i)2, substituted "(i)2i" for "( l)2i" and "(i)3" for ( l)3"; and recodified (m) as new (j).
Amended by R.2015 d.018, effective 1/20/2015.
See: 46 N.J.R. 2107(a), 47 N.J.R. 298(a).
Rewrote the section.
Amended by R.2017 d.010, effective 1/3/2017.
See: 48 N.J.R. 2031(a), 49 N.J.R. 134(a).
In (a), substituted "that" for "which"; and in (b)6, substituted the second occurrence of "$ 250,000" for "$ 500,000", and inserted "or for the Edison Innovation Angel Growth Fund a minimum of $ 250,000".
Amended by R.2017 d.070, effective 4/17/2017.
See: 49 N.J.R. 196(a), 49 N.J.R. 776(a).
Rewrote (b)8 and (h).
Amended by R.2019 d.111, effective 10/7/2019.
See: 51 N.J.R. 820(a), 51 N.J.R. 1537(a).
In (b)2, deleted "Redevelopment" following "Brownfields", and substituted "$ 5,000,000 and the minimum shall be $ 100,000" for "$ 750,000"; rewrote (f); in the introductory paragraph of (i), deleted "at" preceding "a variable"; added (i)7; and recodified former (i)7 as (i)8.

Recodified from 19:31-3.1 56 N.J.R. 807(a), effective 5/6/2024