This program provides loans and guarantees of up to $1 million for non-contamination–related site preparation costs, including, but not limited to land assemblage, demolition, removal of materials and debris, and engineering costs. Eligible projects include commercial, industrial, office, and mixed-use projects in urban and developed suburban communities. Projects must have municipal support and be part of a local development plan.
 

The Brownfields Redevelopment Loan Program is an initiative to encourage urban revitalization. The program enables developers entering into a Brownfields Redevelopment Agreement with the state to borrow up to $750,000 from the New Jersey Economic Development Authority (EDA) to meet remediation costs. Reimbursement comes from new state tax revenues generated by the project. In addition, the EDA works in conjunction with the Department of Environmental Protection (DEP) to assist companies involved in hazardous discharge site investigation and cleanup with loans of up to $1 million for as long as 10 years through the Hazardous Discharge Site Remediation Fund. Municipalities may apply for grants and loans of up to $3 million per year.
 

Municipalities may designate publicly or privately owned lands that are abandoned or underperforming as redevelopment areas. This enables the municipality to spur redevelopment, including the condemnation of property, the use of tax exemptions, favorable bond financing, and the creation of a Revenue Allocation District (RAD). The district may be up to 15 percent of the total taxable property assessed in the community with the redevelopment area. In these RADs, bonds or notes may be secured by a number of revenue sources including the property tax increment, as well as incremental revenue from PILOTS (Payments in Lieu of Taxes), parking taxes, and sales and use taxes retained by the municipality.
 

The EDA may issue long-term, low-cost bonds on behalf of municipalities seeking to fund infrastructure improvements and other new development costs. The bonds are backed by PILOTs negotiated between the developer and municipality and pledged by the municipality as security for the bonds. Advantages include exemption from the calculations of gross debt; favorable interest rates, which may be passed on to redevelopers; the ability to borrow through revenue streams other than general tax revenues; the ability to use the proceeds without the restriction of bidding statutes; and the broad scope of redevelopment costs that may be financed to exempt redevelopment projects from local property tax for a term of up to 35 years. Municipalities may enter into financial agreements with redevelopers exempting the improvements from taxation, whereby the property owner agrees to pay an annual service charge for municipal services under the PILOT program (see above). A five-year exemption may be made for projects not in the redevelopment area, but deemed to be “areas in need of rehabilitation.”
 

The creation of a RAD within a redevelopment area provides a municipality with a unique financing alternative for redevelopment. In these districts, bonds or notes may be secured by a number of revenue sources including the property tax increment, as well as incremental revenue from PILOTs, parking taxes, and sales and use taxes retained by the municipality.
 

This incentive authorizes municipalities to exempt redevelopment projects from local property tax for a term of up to 35 years. Municipalities may enter into financial agreements with redevelopers exempting the improvements from taxation whereby the property owner agrees to pay an annual service charge for municipal services in lieu of taxes (PILOT).

Note: A five-year exemption is available for projects not located in redevelopment areas, but that are deemed to be “areas in need of rehabilitation.”