Assembly Commerce and Economic Development Committee Statement to Assembly, No. 4790 (October 20, 2022)

Summary

The Assembly Commerce and Economic Development Committee statement, dated October 20, 2022, reports favorably Assembly Bill No. 4790, with committee amendments. As amended, the bill requires the New Jersey Economic Development Authority to establish and maintain the New Jersey Non-Profit Loan Guarantee Pilot Program and the New Jersey Non-Profit Loan Guarantee Fund, providing loan guarantees to non-profit organizations for the construction of new physical spaces. Each loan guarantee agreement with a participating bank and non-profit organization will not exceed $15 million per qualified applicant or a period of more than 20 years. The committee amended the bill to remove a requirement that the Authority adopt rules and regulations necessary to implement the bill.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                           STATEMENT TO

                      ASSEMBLY, No. 4790
                          with committee amendments



       STATE OF NEW JERSEY
                          DATED: OCTOBER 20, 2022

          The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 4790, with committee
      amendments.
          This bill, as amended, requires the New Jersey Economic
      Development Authority (“EDA”) to establish and maintain the New
      Jersey Non-Profit Loan Guarantee Pilot Program (“program”) and the
      New Jersey Non-Profit Loan Guarantee Fund (“fund”).
          Under the bill, the authority is required, within six months of the
      effective date of the bill, to provide financial assistance in the form of
      loan guarantees to non-profit organizations to support the construction
      of new physical spaces that are capable of generating income sufficient
      to repay the loans.

      Application Criteria
           The bill requires the EDA to establish an application process. A
      non-profit organization that seeks a loan guarantee agreement under
      the program is required to submit an application to the EDA in a form
      and manner prescribed by the EDA. In addition to any other
      information that the EDA may deem appropriate, the application is
      required to request the non-profit organization to submit proof that the
      non-profit organization has:
           1) been determined by the federal Internal Revenue Service to be
      a tax-exempt organization pursuant to federal law;
           2) been in existence for 10 years prior to the effective date of the
      bill; and
           3) received financial assistance from the State, including grants,
      loans, or any other form of assistance prior to the effective date of the
      bill.
           The EDA may only approve the application if the EDA
      determines:
           1) that the loan for which the application for a loan guarantee has
      been submitted is expected to result in the creation of 10 or more full-
      time jobs upon completion of construction of a new physical space
      financed under the provisions of the bill;
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    2) based on the projections by the non-profit organization,
including the data and assumptions forming the basis thereof, of the
profitability and financial stability over the term of the loan guarantee,
that the loan for which the application for a loan guarantee has been
submitted will support the construction of new physical space that is
capable of generating income sufficient to repay the loan through box
office sales, private donations, sponsorships, or other sources of
revenue; and
    3) that the non-profit organization has a record of financial
stability, good reputation, and credit worthiness.

Loan Guarantee Agreements
    Under the bill, the EDA would enter into an agreement with a
participating bank and a non-profit organization qualified pursuant to
the bill to use the moneys from the fund to guarantee a direct loan or
revolving line of credit provided by the participating bank to finance
the construction of a new physical space by the qualified non-profit
organization. Each loan guarantee agreement that the EDA enters into
with a participating bank and non-profit organization will not exceed
$15 million per qualified applicant or a period of more than 20 years.
The agreements are also required to provide for any other terms or
conditions that the EDA and the participating banks determine as
being necessary or desirable to effectuate the purpose of the program.
    The EDA is also required to establish sufficient reserves and liquid
reserves to provide a sufficient and actuarially sound basis for its
pledges contained in any loan guarantee agreement entered into
pursuant to the bill.

Loan Fund
    The bill requires the fund to be credited with:
    1) an amount from the Economic Recovery Fund that the EDA
determines is necessary to effectively implement the program, within
the limits of funding available from the Economic Recovery Fund;
    2) any moneys received by the EDA from the repayment of the
moneys in the guarantee fund used to provide loan guarantees pursuant
to the bill and interest thereon; and
    3) any other moneys of the EDA, including but not limited to, any
moneys available from other business assistance programs
administered by the EDA that are authorized and determined by the
EDA to be deposited in the fund.

Report Requirements
   Finally, within 24 months following the effective date of the bill,
and on or before February 15 of each year thereafter in which a loan
guarantee agreement entered into under the bill is in effect, the EDA is
required to prepare a report on the program. The report may be issued
separately, or in combination with any reports required by any law
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concerning financial assistance to non-profit organizations in New
Jersey.
    The report is required to include, but need not be limited to, a
description of the demand for the program from qualified non-profits
and participating banks, the efforts made by the EDA to promote the
program, the total amount of loan guarantees approved by the EDA
under the program, and an assessment of the effectiveness of the
program in meeting the goals of the bill. The EDA is required to
submit its report to the Governor and the Legislature, including any
recommendations for legislation to improve the effectiveness of the
program.

COMMITTEE AMENDMENTS:
  The committee amended the bill to remove a requirement that the
EDA adopt rules and regulations necessary to implement the bill.


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