STRATEGIC FRAME WORK FOR COMMERCIAL REVITALIZATION
Part II of an Exploratory Study to Establish a Special Improvement
District on Springfield and South Orange Avenues, Newark, NJ
Report to the Corinthian Housing Development Corporation and New Community Corporation
May 11, 1998
CURRENT REVITALIZATION EFFORTS IN NEWARK
In order to identify the best course of action for the commercial revitalization of the West Side Park, whether or not it is a Special Improvement District, it is necessary to have an understanding of the types of options currently in place within Newark. There are several federal, state, and local programs that currently serve as potential financial and organizational resources for the neighborhood.
Newark Enterprise Community
In 1994, Newark was selected by the federal government to participate in the Federal Empowerment Zone and Enterprise Community program (EZ/EC). The EZ/EC Initiative combines tax incentives for business development and job creation with a comprehensive approach to community revitalization through performance-oriented block grants. The West Side Park of Newark borders two of the Enterprise Community neighborhood zones for the cuts, namely neighborhood 3 and neighborhood 4. Since its designation, Newark has received over $3 million in Title XX Social Service Block Grants and has also utilized its access to tax-exempt bond financing. These funds are targeted on approved activities identified within the EZ/EC strategic plan.
The Enterprise Community program stresses the need for community-based partnerships among representatives from local government, private sector, academic community, residents, and social service organizations. Members from each of these groups belong to the Enterprise Community Board of Trustees (38 members) that holds monthly public meetings in order to define the Enterprise Community's goals and agenda. Any Enterprise Community funds expended or actions taken must relate to the activities specified in the community's Strategic Plan. Through the EZ/EC program, the federal government has committed itself to working with designated communities in order to overcome regulatory impediments and permit flexible use of existing federal funds. Presently, neighborhoods 3 and 4 are about to undertake a retail market analysis to aid them in their economic development initiative.
Newark Urban Enterprise Zone (UEZ)
Urban Enterprise Zone legislation, enacted by the State of New Jersey in 1983, created a total of twenty-seven urban enterprise zones across the state, including one in the city of Newark. The Urban Enterprise Authority, comprised of the Commissioners of Commerce and Economic Development, Community Affairs, Labor, and the State Treasurer (or their designees) as well as five public members, are responsible for designating areas as enterprise zones. The UEZ zones and funding are restricted to commercial areas; no specific allocations toward residential rehabilitation are permitted. The program spans twenty years. Newark received its designation as an enterprise zone in 1984. Barring an amendment of the legislation, Newark's UEZ funds will expire in the year 2004. The Newark Economic Development Corporation (NEDC) coordinates the affairs of the UEZ. The West Side neighborhood is bordered on three sides by streets included in Newark's Urban Enterprise Zone.
Advantages of the New Jersey UEZ Program
In addition to these zone amenities, the UEZ budget is often directed toward capital improvement projects, hiring police officers, employing economic development staff, and any other projects that will enhance the zone's economic development. To date, the West Side Park neighborhood has not effectively tapped into this potential resource. For the UEZ to best meet the needs of the neighborhood, the West Side Park merchants must organize into a coherent group with an agreed-upon set of objectives.
- Qualified retailers may charge 50 percent of New Jersey sales tax on "in person" purchases.
- Sales tax exemptions on purchases of building materials, services, and for most tangible personal property.
- An eligible firm may receive an incentive tax credit of 8 percent of their investment in the zone.
- A one-time corporation tax credit of $1,500 for providing full-time employment to an unemployed resident in a UEZ zone. The resident must depend on public assistance or have been unemployed for a minimum of ninety days.
- Corporation tax credit of $500 for employing a resident within the zone, within another zone, or within a qualifying municipality.
- Unemployment insurance subsidies for certain new employees.
- Possible regulatory relief by zone request.
- Priority for financial assistance from New Jersey Local Development Financing Fund (LDFF) and job training program.
- Supplementation of salaries, up to 50%, in specific skill training programs.
Successful UEZ Efforts
The city of Plainfield, using UEZ funding, has been able to establish a successful sign and fašade program. In 1990, the Plainfield Business Development Corporation began using UEZ funds toward its physical improvement program. This plan was designed to disburse both grants and loan monies in a long-term effort to improve the appearance of its commercial corridor. Providing a 'free money' incentive made the businesses more apt to make an investment and take out a loan (Gluck, 1990). In addition, the loans are also at no interest for the businesses; all interest is paid back to the partnering bank through the development corporation's UEZ funds.
The City of Trenton focuses UEZ funds in its downtown Special Improvement District. The funds are used toward the salaries of the economic development staff, as well as the SID's physical improvement program. The Trenton Commons, located in the heart of the downtown, received UEZ monies for paving, curbing and street reconstruction. Recently added to the list of UEZ projects is the Warren Street Plaza complete with clock tower, benches, landscaping, and a historical statue. This plaza will be the new site of the farmer's market. Since UEZ funds are utilized for physical improvements in the commercial areas, the SID assessments are lower. Thus enabling the funds derived from the assessments to be concentrated on marketing, festivals and educational programs.
Although both Springfield and South Orange Avenues are within Newark's UEZ boundaries, the area has seen very few physical improvements. This is because UEZ grants come out of sales tax exemptions from the districts in which they are designated. Subsequently, given the present conditions in the West Side Park the funds available to the UEZ are limited. With community organization, UEZ monies could be allocated toward hiring a staffperson who would work within the community in order to develop an economic strategy for the area. Having established the community's needs and goals, the grant-writing effort could begin. In order to reap the benefits of the UEZ, the West Side Park neighborhood must come together to ensure that these funds are being appropriated strategically. If the community speaks with a unified voice it will better access the resources the UEZ has to offer. (See the recommendations in Part III for more details.)
Office of Neighborhood Empowerment (ONE)
The Office of Neighborhood Empowerment (ONE) initiated in 1996 is dedicated to working with individual communities in order to help structure programs that target local needs. ONE serves as staff to the Urban Coordinating Council (UCC), which was created as a part of Governor Whitman's "New Jersey Urban Redevelopment Act" that targets the revitalization of the state's urban centers. The Office of Neighborhood Empowerment reviews applications for designation and then makes its recommendations to the UCC, which has the ultimate vote. The office works with the UCC and the New Jersey Redevelopment Authority to ensure coordinated access to state services and technical assistance.
Available Assistance from ONE
The Office of Neighborhood Empowerment is a particularly important resource in that the West Side Park neighborhood is designated as an Urban Coordinating Council target area. Newark Community Development Network (NCDN) is the local sponsor of the urban initiative to revitalize the West Side Park area of Newark. There are five community-based organizations involved in this process: New Community Corporation, United Community Corporation, Corinthian Housing Development Corporation, International Youth Organization, and Tri-City Peoples Corporation. Each of these organizations has a member on the steering committee, which is called the Neighborhood Empowerment Council. The focus is on bottom-up programming that meets the needs of the residents. As a result, membership on the Council is comprised of a power sharing between residents and community leaders. The proportion of participation is 51% and 49% respectively. The NCDN is about to undertake a community planning process to identify the goals and the objectives of the community. The outcome of this process will be an empowerment plan with a timeline for its implementation.
- Communication. ONE can provide links to key people at state agencies as well as guidance on state regulations and the permitting process. In addition, they sponsor local discussions and regional conferences regarding relevant current issues.
- Funding. ONE provides funds for neighborhood based planning efforts.
- Technical Assistance. Neighborhood-based and strategic planning assistance is also available to designated cities. Access to state and local databases are also provided along with the planning assistance.
- Education. ONE can help explain and educate communities regarding basic grassroots planning and funding development. The West Side Park Neighborhood is a Urban Coordinating Council target area.
Newark Economic Development Corporation (NEDC)
While the Newark Economic Development Corporation is not a branch of city government, it is Newark's major agent of economic development. The city and the business community created the small non-profit in 1965, and since that time it has provided its services free of cost. The staff of the NEDC is composed of professionals from the legal, financial, real estate and development fields. The Newark EDC offers financial assistance to developers by linking them to both public and private funds. In addition, the NEDC provides support for businesses to expand by providing access to programs that might be of interest to businesses and residents of the West Side Park neighborhood.
NEDC Program List
In addition to these programs the NEDC offers assistance and support to businesses by linking them to the following programs free of charge. They are New Jersey Community Loan Fund, New Jersey Small Business Development Center, and NJIT's Enterprise Development Center. Although the NEDC is an existing resource for the West Side Park business community, a lack of awareness of the programs combined with a lack of merchant organization has prevented the area from benefiting from the NEDC.
- Economic Development Authority (EDA) loans, bonds and guarantees.
- EDA Business Employment Incentive Program (BEIP).
- Business Relocation Assistance Grants (BRAG).
- Regional Business Partnership SBA Loan Program.
- Fašade grant program.
- Newark Enterprise Community Small Business Loans.
- Federal Enterprise Community Tax Exempt Bond Financing.
- The NEDC maintains a database of Newark sites that are currently for sale or lease and provide siting assistance for businesses wishing to locate to Newark or looking for larger or modern facilities within the city.
Newark's Overall Economic Development Plan (OEDP)
The City of Newark developed an Overall Economic Development Plan in 1997 (OEDP) in order to formulate strategies to overcome the constraints to economic revitalization in Newark. The plan was a collaborative effort between the City of Newark and the Newark Economic Development Corporation (NEDC). The plan divided the city into sectors. The sectors were Workforce and Neighborhood Development, Manufacturing, Transportation, Health and Higher Education, Technology and Communications, Finance Insurance, Real Estate and Business Services, and Small Businesses. The NEDC and the Newark Department of Development gathered a focus group for each sector in order to increase input into the planning process. Members of the focus group came from differing backgrounds - chosen based on their affiliations - which ensured a good mix of private and public interest.
There are multiple benefits to using a focus group in order to identify the strengths and challenges to development. Doing so helps to ensure that more sectors are represented and participate in the planning process for example local leaders. (Gerald Bishop, of Corinthian housing was a member of the Workforce and Neighborhood Development Focus Group). The goals set in 1997, which came out of the work by the focus groups, recognized the importance of safety and security in the attraction of investment. To this end it identified a comprehensive approach which would also address the issues of unemployment and poverty. Other targets included complementary programs to upgrade the skills of Newark residents as well as the attraction of businesses that can provide jobs and help revitalize neighborhoods. This plan and the subsequent one for 1998 are a valuable resource to use in finding solutions to the problem of blight. The goals of OEDP '98 should complement the 1997 goals. The following is a list of a few of the programs that will benefit residents and businesses in the West Side.
Goals of OEDP
- Retail fašade improvement. To upgrade the physical environment, level of services, safety, and environmental quality the city has embarked on a retail fašade improvement program. Areas within the EC/UEZ will have priority.
- Training programs. To encourage new manufacturing and distribution firms to locate in the city, Newark has developed refinement, redirection of training and retraining programs to improve the skills of Newark's residential workforce.
- Industrial district. The city is also looking to establish a new industrial district that would enable businesses to benefit from institutions of higher education and access to transportation.
- Retail business. The city is looking to use retail business location to revitalize neighborhoods and serve the changing needs of its residents.
Newark City Council
The West Side Park neighborhood is within the Central Ward's legislative district. For four terms, Councilman George Branch has represented the community at City Council. As a retired community service aide from the Newark Housing Authority, Councilman Branch is familiar with the problems of the West Side Park neighborhood. The Councilman has established several programs intended to help the children in the community. Programs such as Project Pride and Newark's Housing Authority Scholarship Fund stress pride and empowerment for the area youth. Councilman Branch is confident that the Central Ward will slowly climb out of decline. He called it the "renaissance ward in the renaissance city". Councilman Branch promises his commitment to any project that will benefit his constituents. The importance of an enabling political climate cannot be overemphasized. In order to better access City Hall, a neighborhood must be involved in local politics. Formed into a collective voice, the community can approach its representative with a coherent set of needs.