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

Summary

Statement of the Assembly Commerce and Economic Development Committee of the State of New Jersey, dated October 20, 2022, reporting Assembly Bill 4790 favorably with committee amendments. The bill requires the New Jersey Economic Development Authority to establish the New Jersey Non-Profit Loan Guarantee Pilot Program and Fund, guaranteeing loans to non-profit organizations for construction of new physical spaces capable of generating income sufficient to repay them. Applicants must show tax-exempt status, 10 years of existence and prior State financial assistance, and the loan must be expected to create 10 or more full-time jobs. Each guarantee agreement with a participating bank is capped at $15 million per applicant and 20 years, and the fund draws on the Economic Recovery Fund. The amendments removed a rulemaking requirement.

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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;

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 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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