Terrence Malloy, chief financial officer for the City of Bayonne and executive director of the city’s Urban Enterprise Zone, remembers the exact date when the city’s UEZ status began – partly because the final approvals came on the first anniversary of the 9/11 attacks, but also because setting up the state program here in Bayonne was among the most arduous tasks of his nearly 30 years as a public employee.
“Setting up the UEZ is the hardest thing I did in my career.” – Terrence Malloy
A UEZ is a state-designated business district that can charge customers half of the normal state sales tax, and the funds collected from the discounted sales tax remain in the zone to finance local projects.
The UEZ in Bayonne began on Sept. 12, 2002, Malloy said, and after more than six years of successful operations, the UEZ is being fine-tuned. It will reflect some of the changes that have occurred since the program started, including some new businesses in the area of First Street, a new power plant being constructed on the southeastern corner of the city, and a new for-profit Bayonne Medical Center.
“Setting up the UEZ is the hardest thing I did in my career,” he said. “Compared to that, this was not a problem.”
After heavy lobbying of state officials back in 2001, the state agreed to include Bayonne and other communities in developing Urban Enterprise Zones.
For Bayonne, this was critical because of heavy competition from other parts of Hudson County, which already had their own zones in place that often drained off customers from local businesses.
Then-Mayor and state Assemblyman Joseph Doria successfully argued that the closure of the Military Ocean Terminal in the 1990s depressed Bayonne’s economy and that a UEZ would help the city to develop new businesses to counteract the loss of the base.
In his last action as acting governor, Donald DiFrancesco signed legislation in January 2002 that created the Bayonne UEZ – although Malloy spent the rest of the year gathering the documentation the state required.
The legislation allowed businesses to charge 3 percent sales tax (now 3 1/2 percent) and gave businesses a variety of incentives for becoming members.
Although Malloy has a very small staff, the UEZ is supervised by a board that is responsible for developing a yearly budget for the sales tax revenues. These funds may be spent on a variety of improvements and services in the UEZ with state authorization.
The board includes the president of the Bayonne Chamber of Commerce or designee, the executive director of
the Town Center Management Corporation or designee, the executive director of the Bayonne Housing Authority
or designee, the executive director of the Bayonne Local Redevelopment Authority or designee, the executive director of the
Bayonne Parking Authority or designee, and three members of the community.
In preparing to establish the UEZ, Malloy did a huge amount of preparatory work, gathering economic and geographical information about Bayonne.
Even though the zone was established in early 2002, the New Jersey Urban Enterprise Zone Authority required a massive amount of data before the UEZ could become effective, which included an inventory of the types of commercial and industrial enterprises that operated in Bayonne, and the formation of a map of what parts of the city the UEZ would cover.
The shaded areas of the map look a lot like a spider web since all areas must be connected.
The original map covered all commercial zones – the entire MOTBY, the Highway Development Zone along Route 440 (formerly Route 169), the Texaco development site, and significant portions of industrial areas. The map can be changed after five years.
Malloy said while the zone remains the same size as it was before, portions formerly included in the zone have been taken out – such as the road areas and parks at the former MOTBY, which were recently demolished.
The designation will give a boost to Bayonne Medical Center because they will be exempt from state sales tax for many of the purchases they make from vendors operating in New Jersey. This is also true in regards to the construction work at the new power plant.
Although the UEZ has always worked with the city’s Bayonne Economic Development Corporation, Malloy said a new agreement has been forged to use the BEDC to help get new businesses to relocate to Bayonne.
Another program Malloy hopes to have in place by Feb. 1 would allow smaller businesses to borrow short-term funds from the UEZ at a low interest rate.
“Sometimes, especially early in the year, small businesses have a tough time meeting payroll,” he said. “In the past, they would establish a line of credit with a bank.”
But with credit evaporating as a result of the national economic downturn, bank funds may no longer be available to small businesses. If approved by the board, the UEZ would establish credit up to $5,000 at 2 percent for smaller businesses to be paid back within six months.
“If the business cannot pay it all back within six months, then it can convert the loan to an 18 month loan at 6 percent interest,” Malloy said.