Update: U.S. Treasury Approves New Jersey’s Opportunity Zones

As we had previously written, the Murphy Administration recently recommended 169 census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. The Treasury Department has now approved Governor Murphy’s recommendations. A list of the Opportunity Zones and an interactive map showing the Zones can be found through the New Jersey Department of Community Affairs. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for...

Medical Marijuana Reforms on the Horizon

Governor Phil Murphy and the New Jersey Legislature are taking actions towards expanding the medical marijuana program. The Governor announced new rules and regulations to reduce barriers to access for medical marijuana. These include expanding the list of debilitating medical conditions eligible for treatment with cannabis, permitting currently licensed Alternative Treatment Centers (ATCs) to dispense at satellite locations, eliminating the physician registry for doctors who prescribe marijuana, and soliciting new applicants for ATC permits. These actions stem from the Administration’s report on ways to expand access to marijuana for medical purposes. The New Jersey General Assembly Health and Senior Services Committee also recently approved legislation that would vastly expand the State’s existing medical marijuana program. The bill, A-3740, would allow medical marijuana to be prescribed for any condition and give greater flexibility for patients and caregivers to purchase and transport medical marijuana. Most importantly, and unlike the current medical marijuana distribution system where ATCs both cultivate and dispense medical marijuana, A-3740 creates a separate manufacturing and licensure system. The bill allows for the licensure of 34 medical marijuana dispensaries that would be authorized to dispense marijuana and marijuana products to patients. The legislation would also permit licensure of six medical marijuana cultivator-processors...

New Jersey Picks Its Opportunity Zones

The Murphy Administration announced it has recommended census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for the purpose of investing in Opportunity Zone Property. Eligible Opportunity Zone Property generally includes (i) stock in a domestic corporation; (ii) any capital or profits interest in a domestic partnership; and (iii) tangible property used in a trade...

Governor Murphy Delivers Fiscal Year 2019 Budget Address

Governor Phil Murphy delivered his first budget address to the New Jersey State Legislature on Tuesday, March 13th. The Governor’s proposed Fiscal Year (FY) 2019 Budget totals $37.4 billion, which is a $2.7 billion increase from the $34.7 billion spending plan enacted in Fiscal Year 2018. The Governor stated that the proposed FY 2019 Budget is “realistic and responsible,” affirms New Jersey’s values, and will begin the process of returning New Jersey to being a “good value for good money.” To accomplish this, Governor Murphy is proposing to: Increase public school spending by $341 million in FY 2019 with the goal of reaching full funding in four years; Invest an additional $83 million in pre-K this year and start a four-year expansion of a statewide program; Make community college tuition free for all in three years by investing an additional $50 million this fiscal year; Add 3,500 new Tuition Aid Grant awards; Triple funding for New Jersey Transit with an additional $242 million in investment; Increase the Earned Income Tax Credit from 35 percent to 40 percent over three years; Provide $3.2 billion in payments to the state pension system; Increase the minimum wage to $11 per hour for state...

New Jersey Corporate Reforms Become Law

A package of bills that reform the New Jersey Business Corporation Act (“NJBCA”) were signed into law on January 16, 2018. We previously wrote about this legislation which was modeled upon provisions of the “Delaware Business Corporation Law” and was recommended for enactment by the “New Jersey Corporate and Business Law Study Commission.” These revisions generally benefit corporate boards of directors and modernize provisions of the NJBCA. Inspections of Corporate Books and Records (P.L. 2017, c.364) Assembly Bill 2975 (Diegnan/Pinkin) modifies the NJBCA to allow corporations to impose reasonable limitations or conditions on the use or distribution of requested corporate books and records. While the law does not define such “limitations and conditions,” the legislative statement provides an example of conditioning the receipt of requested materials on the demanding shareholder agreeing to customary confidentiality obligations. The measure preserves the ultimate authority of a court to decide and order relief in actions brought by shareholders for inspection of materials. Derivative Proceedings and Shareholder Class Actions (P.L. 2017, c.362) Assembly Bill 2970 (Diegnan/Pinkin) gives corporations greater flexibility to vary the applicability or effect of commencing and maintaining a derivative proceeding and shareholder class action. This new law deviates from the prior standards and requires that...

Governor Murphy Takes the Oath of Office, Executive Action on Pay Equity

Phil Murphy was sworn in as New Jersey’s 56th Governor on January 16, 2018. Also assuming office was New Jersey’s second Lt. Governor, Sheila Oliver. In his Inaugural Address, Governor Murphy’s theme was one of inclusiveness and making New Jersey fairer and stronger for all residents. He spoke of restoring confidence in state government, leading through progressive policies based on common sense, and enacting a State Budget that was both fiscally and morally responsible. He specifically challenged the Legislature to send him legislation to restore funding for women’s healthcare and Planned Parenthood; raise the minimum wage to $15 per hour; provide equal pay for women; require employers to provide earned sick leave; expand voting rights; and enact new gun safety laws. The Governor noted that each of these bills would be met with a signing ceremony upon its passage. The Governor also took action and signed an Executive Order barring state workers from asking job applicants seeking positions with the state about their previous salaries. At the signing ceremony, the Governor publicly stated he would sign a bill that extended these same provisions to private sector employers. As Governor Murphy takes office, he has already nominated most of his Cabinet and...

Committee Assignments for State Senate and General Assembly Announced

Senate President Steve Sweeney and Assembly Speaker Craig Coughlin announced the committee chairpersons and committee members for the 218th Legislative Session. While most committee chairs remained the same, several important committees will see new leaders in both the Assembly and Senate. Assemblywoman Eliana Pintor Marin (D-28) became Chairwoman of the Assembly Budget Committee, succeeding Assemblyman Gary Schaer (D-36) who had chaired the committee for the past several sessions. Assemblyman Gordon Johnson (D-37) returned to his chairmanship of the Assembly Commerce Committee after having relinquished that role last session, and Assemblyman John McKeon (D-27) assumed the Chairmanship of the Assembly Financial Institutions and Insurance Committee. A new committee, the Assembly Science and Technology Committee, was formed and will be chaired by Assemblyman Andrew Zwicker (D-16). Lastly, Assemblywoman Nancy Pinkin (D-18) will chair the Assembly Environment and Solid Waste Committee. Senator Bob Gordon (D-38) took over the chairmanship of the Senate Transportation Committee, a position previously held by Senator Nick Sacco (D-32). By becoming Chair of Senate Transportation, Senator Gordon relinquished his Chairmanship of the Senate Legislative Oversight Committee, which will now be led by Senator Brian Stack (D-33). Senator Nilsa Cruz-Perez (D-5) is the new Chairwoman of the Senate Economic Growth...

New Jersey Legislature Reorganizes and Governor Christie Delivers His Final State of the State Address

The 218th Session of the New Jersey Legislature began on January 9, 2018 with the swearing-in of new members, remarks from Senate President Stephen Sweeney (D-3) and newly elected Speaker Craig Coughlin (D-19), and the final State of the State Address from Governor Chris Christie. Senate Reorganization Senate President Stephen Sweeney retained his role as leader of the Senate. Democrats control the chamber by a 25 to 15 margin, a one seat gain from the prior session. The Senate has five new members: Chris Brown (R-2); Troy Singleton (D-7); Vin Gopal (D-11); Declan O’Scanlon (R-13); and Joe Cryan (D-20). Senate President Sweeney outlined his priorities for the 218th Session. The Senate will convene a joint panel on taxation, led by Senator Paul Sarlo (D-36) and Senator Steve Oroho (R-24). The Senate will also focus on equalizing the school funding formula among towns, expanding pre-K education and focusing on higher education affordability. The Senate President called for a new round of higher education investment and for expanding the progress made on vocational employment. Transportation infrastructure will be a focus for the Senate. Specifically, the Senate President spoke of expanding light rail service along the Hudson-Bergen Rail and the creation of the...

What’s a “Pocket Veto” Anyway? – A Guide to the End of New Jersey’s 217th Legislative Session

At noon on January 9, 2017, the New Jersey Legislature’s 217th session comes to a close. That means any bill not presented to the Governor for his consideration before then will become moot and must be reintroduced in the 218th session. But certain constitutional rules also apply to bills passed by the Legislature and presented to the Governor in the last days of the session. During the two year legislative cycle, the New Jersey Constitution (Art. V, §1, ¶14(b) and (c)) allows the Governor 45 days to either sign the bill or veto it, with the veto being either absolute or conditional. This time frame can be extended if the house of origin (the Senate or General Assembly) is not in session on the 45th day. If the Governor takes no action within the allotted time, the bill becomes law. Any bill presented to the Governor on or after November 25, 2017, cannot receive 45 days of consideration before the end of the session on January 9, 2018. The New Jersey Constitution (Art. V, §1, ¶¶14 (c) and (d)) provides special procedures for this situation: Any bills presented on November 25, 2017, must be signed by noon on January 9, 2018, or...

NJEDA Proposes Readoption and Changes to Administrative Rules

Notwithstanding recent headlines about attempts to “kill” off the New Jersey Economic Development Authority (NJEDA), reports of the NJEDA’s death are greatly exaggerated. On November 20, 2017, the NJEDA proposed for readoption with amendments the administrative rules for its assistance programs. This includes changes to the Grow NJ Assistance Program (the “Grow NJ Program”) that implement the recently enacted law creating incentive areas around colleges and universities; modifications to the submission dates for the Economic Redevelopment and Growth Program (the “ERG Program”); and revisions to the Angel Investor Tax Credit Program (the “Angel Investor Program”). Interested parties may submit written comments by January 19, 2018. The NJEDA is an independent State agency that finances small and mid-sized businesses, administers tax incentives to retain and grow jobs, revitalizes communities through redevelopment initiatives and supports entrepreneurial development by providing access to training and mentoring programs. We have previously written about some of the NJEDA’s programs, and the most important proposed changes to the NJEDA’s program rules are listed below. Grow NJ Grow NJ encourages economic development and job creation by offering tax credits to businesses looking to relocate to the State, or that are currently located in New Jersey but are in danger of...