For individuals or private businesses interested in redeveloping contaminated, dilapidated or outdated New Jersey properties there is a myriad of funding opportunities available through the New Jersey Economic Development Authority (“EDA”).
One type of financial assistance that the EDA offers for prospective redevelopers is the Smart Growth Pre-development Guarantee (“Guarantee”). Under this program, the EDA will guarantee private conventional financing in an amount up to $1,000,000.00 for projects that are located in certain designated areas as defined under the New Jersey State Development and Redevelopment Plan (“State Plan”), have received municipal support and are part of a local redevelopment plan. Proceeds from guaranteed loans must be used to finance expenses related to pre-development site preparation, such as land assemblage, demolition, removal of materials and debris and engineering costs.
Another initiative is the Direct Loan Program, which includes, among others, the Smart Growth Pre-development Loan and the Brownfields Redevelopment Loan. The EDA is authorized to grant either or both of these loans directly to redevelopers, provided that the redeveloper making the application is unable to obtain conventional financing. Combined financing may yield as much as $1,000,000.00 and must be repaid over a maximum term of three years. As with the Guarantee, a redeveloper must use funds secured by a Smart Growth Pre-development Loan for pre-development site preparation costs on projects that are located in certain areas designated under the State Plan, have received municipal support and are part of a local redevelopment plan. Contrarily, proceeds received under a Brownfields Redevelopment loan must be applied to eligible remediation costs. Moreover, in order for a redeveloper to obtain a Brownfields Redevelopment loan the redeveloper must have entered into a remediation and redevelopment agreement for the project site with the New Jersey Department of Environmental Protection, the New Jersey Department of the Treasury and the New Jersey Commerce and Economic Growth Commission.
In addition to loan guarantees and direct loans, the EDA may issue grants to individuals and private businesses to facilitate redevelopment. For example, under the Hazardous Discharge Site Remediation Fund, which is a special revolving fund established in the EDA pursuant to the Brownfield and Contaminated Site Remediation Act, the EDA may award an “innocent party” conducting remediation activities at an “eligible project”, as such terms are defined in EDA regulations, as much as $1,000,000.00 in grant money to cover up to 50% of the remediation costs. This grant program is particularly appealing in that innocent parties, among other classes of grant recipients, are exempt from having to show that they cannot establish a remediation funding source for all or part of the clean-up expenses.
The EDA dispenses other type of financial assistance under the Hazardous Discharge Site Remediation Fund, and administers a number of other funding ventures, such as the Downtown Beautification Program providing low-interest loans of up to $100,000.00 to owners and operators of retail and commercial businesses to upgrade properties in targeted urban areas.
Additional information on EDA funding for site remediation and redevelopment may be obtained by contacting the EDA’s Brownfields Redevelopment Office at (609) 341-2723 or by visiting the EDA’s website.
In conclusion, EDA funding initiatives have real potential to contribute to and bolster the financial wherewithal of individuals and private businesses intent upon transforming old or contaminated urban properties into economically viable sites. Indeed, this is truly an exciting time for those who are interested in redeveloping New Jersey’s cities and older suburbs. However, given the complexities inherent in redevelopment financing (and numerous other potentially applicable laws, regulations and ordinances not discussed here) all owners and future purchasers of contaminated, dilapidated or outdated properties would be well advised to seek legal counsel before submitting an application for financial assistance in cleaning up or redeveloping a project site.