"Innovate New Jersey Act"; establishes tax-free business incubators at institutions of higher education.

A235

ASSEMBLY, No. 235

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman JOHN V. AZZARITI JR., M.D.

District 39 (Bergen)

SYNOPSIS

���� "Innovate New Jersey Act"; establishes
tax-free business incubators at institutions of higher education.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning assistance to business incubation facilities
at institutions of higher education
, supplementing P.L.1974, c.180
(C.34:1B-1 et seq.), and amending R.S.54:4-3.6
.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� (New section) This act
shall be known and may be cited as the "Innovate New Jersey Act."

���� 2.��� (New section) As used in
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill):

���� "Advanced technology
center" means a center at a public or private institution of higher
education, which is provided substantial and concentrated financial support to
promote the development of innovative technology research.

���� "Authority" means
the New Jersey Economic Development Authority established pursuant to section
4 of P.L.1974, c.80 (C.34:1B-4).

���� "Business incubation
facility" means a low-cost, short-term occupancy, rental space wherein
assistance is granted to a targeted network of new businesses employing
selected technologies congruent with the strengths of a public or private
institution of higher education in this State.� A �business incubation
facility� shall include any "business incubation facilities" as
defined in section 2 of P.L.1985, c.102 (C.52:9X-2); a "qualified
incubator facility" as defined in section 2 of P.L.2011, c.149 (C.34:1B-243)
or section 3 of P.L.2009, c.90 (C.52:27D-489c); or an �advanced technology
center� or innovation zone established by the authority if the "business
incubation facilities," "qualified incubator facility,� �advanced
technology center,� or innovation zone is located on the campus of an
institution of higher education and otherwise meets the criteria established
pursuant to P.L.��� , c.��� (C.������� ) (pending before the Legislature as
this bill).

���� "County college"
means an educational institution established or to be established by one or
more counties, offering programs of instruction, extending not more than two
years beyond high school, which may include, but not be limited to, specialized
or comprehensive curriculums, including college credit transfer courses,
terminal courses in the liberal arts and sciences, and technical institute type
programs.

���� �Director� means the Director
of the Division of Taxation in the Department of the Treasury.

���� "Eligible land"
means land eligible pursuant to sections 5 or 6 of P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill) for approval as a tax-free New
Jersey area.

���� "Innovate New Jersey
Board" or "board" means the Innovate New Jersey Board
established pursuant to section 4 of P.L.��� ,

c.��� (C.������� ) (pending before the Legislature as this bill).

���� "Innovate New Jersey
Grant Fund" or "fund" means the Innovate New Jersey Grant Fund
established pursuant to section 18 of P.L. , c. (C.�������
) (pending before the Legislature as this bill).

���� "Innovate New Jersey
Program" or "program" means the Innovate New Jersey Program
established pursuant to the provisions of P.L.��� , c.��� (C.������ ) (pending
before the Legislature as this bill).

���� "Institution of higher
education" shall include a public institution of higher education and
private institution of higher education.

���� "Net new job" means
a job created in a tax-free New Jersey area that satisfies all of the following
criteria:

���� a.��� is new to the State;

���� b.��� has not been transferred
from another business located in this State through: an acquisition, merger,
consolidation, or other reorganization of businesses; the acquisition of assets
of another business; or from a related person in this State;

���� c.��� is either a full-time
wage-paying job or equivalent to a full-time wage-paying job requiring at least
35 hours of work per week; and

���� d.��� is filled for more than
six months.

���� Net new job shall not include a
job filled by an individual employed within the State within the immediately
preceding 60 months by a related person.

���� "New business" means
a business that satisfies all of the following criteria:

���� a.��� the business is not
operating or located within the State at the time it submits its application to
participate in the Innovate New Jersey Program;

���� b.��� the business is not
moving existing jobs into a tax-free New Jersey area from another area in the
State;

���� c.��� the business is not
substantially similar in operation and in ownership to a business entity that
is taxable, taxable within the last five taxable years, or which would have
been subject to tax under the tax laws of this State; and

���� d.��� the business shall not
have caused individuals to transfer from existing employment with a related
person located in the State to similar employment with the business, unless the
business has received approval for the transfers from the authority after demonstrating
that the related person has not eliminated those existing positions.

���� "Private institution of
higher education" means an independent college, university, or institute
incorporated and located in New Jersey, which by virtue of law, character, or
license is a nonprofit educational institution authorized to grant academic
degrees and provide a level of education which is equivalent to the education
provided by the State's public institutions of higher education as attested by
the receipt of and continuation of regional accreditation by the Middle States
Association of Colleges and Schools, and which is eligible to receive State aid
under the provisions of the Constitution of the United States and the
Constitution of the State of New Jersey, but does not include any educational
institution dedicated primarily to the education or training of ministers, priests,
rabbis, or other professional persons in the field of religion.

���� "Public institution of
higher education" means Rutgers, The State University of New Jersey, the
New Jersey Institute of Technology, Rowan University, a State college, a county
college, and any other New Jersey public university or college established or
authorized by law.

���� "Related person" shall
have the same meaning as provided in subparagraph (C) of paragraph 3 of
subsection (b) of section 465 of the federal Internal Revenue Code (26 U.S.C.
s.465).

���� "Sponsoring institution
of higher education" means an institution of higher education that has
received approval to sponsor a tax-free New Jersey area pursuant to sections 7
or 8 of P.L.��� , c.��� (C.������� ) (pending before the Legislature as this
bill).

���� "Tax-free New
Jersey area" means eligible land or vacant space of an institution of
higher education that meets the eligibility criteria and has been approved as a
tax-free New Jersey area pursuant to sections 7 or 8 of P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill).

���� "Underutilized
property" means abandoned eligible land or vacant space at an institution
of higher education.

���� 3.��� (New section) There is
established an �Innovate New Jersey Program� within the authority.� The purpose
of the program is to provide assistance to any qualified new business in
operation at a business incubation facility on the campus of an institution of
higher education located in New Jersey.

���� 4.��� (New section)� a. �There
is established within the authority the Innovate New Jersey Board.

���� b.��� The purpose of the board
shall be to review, consider, and approve applications by� institutions of
higher education to allocate:

���� (1)� tax-free space for a
business incubation facility where qualified new businesses will be eligible to
locate and� operate; and

���� (2)� allocate grant monies
made available through the Innovate New Jersey Grant Fund established pursuant
to section 18 of P.L. , c. (C.�������
) (pending before the Legislature as this bill).

���� c.��� The board shall be
comprised of five members.� The Governor, the President of the Senate, the
Speaker of the General Assembly, the Senate Minority Leader, and the Assembly
Minority Leader shall each appoint one member with significant expertise and
experience in academic-based economic development. Each member of the board
shall serve a term of five years.� A board member shall recuse himself or
herself from voting on any project where the board member, a member of his or
her immediate family, or a business organization in which he or she has an
interest, has a direct or indirect financial involvement that may reasonably be
expected to impair his or her objectivity or independence of judgment.�
Vacancies in the membership of the board shall be filled in the same manner as
the original appointments were made. �Board members shall serve without compensation but may be reimbursed for necessary expenses incurred in the performance of
their duties within the limits of funds available to the board.

���� d.��� The board shall be
entitled to call to its assistance and avail itself of the services of the
employees of the authority, any institution of higher education, and any State
department, board, bureau, commission, authority, agency, or other entity, as
the board may require and as may be available for its purposes.� The board may
employ stenographic and clerical assistance, and incur traveling and other
miscellaneous expenses as may be necessary to perform its duties, within the
limits of funds made available to the board for its purposes. �The authority
shall provide staffing for the work of the board.

���� e.��� The board may approve an
application by an institution of higher education for the purposes described in
subsection b. of this section only by a majority vote of the full membership of
the board.

���� 5.��� (New section)� a.�
Subject to the limitations prescribed in this section, the following shall
constitute the eligible land of a public institution of higher education:

���� (1)� any vacant land or vacant
space in any building located on a campus of a public institution of higher
education; and

���� (2)� a business incubation
facility having a bona fide affiliation with a public institution of higher
education with the approval of the authority.

���� In order for there to be a
bona fide affiliation of a business incubation facility with a public
institution of higher education, the business incubation facility and the
public institution of higher education shall have established a partnership to
provide assistance and physical space to a new business.� The business
incubation facility and the public institution of higher education shall
directly work towards the goal of jointly creating jobs and incubating new
startup businesses and the mission and activities of the business incubation
facility shall align with or further the academic mission of the public
institution of higher education.

���� b.��� A public institution of
higher education which qualifies under subsection a. of this section may apply
to the Innovate New Jersey Board for a determination that identified vacant
land or identified vacant space in a building on the public institution of higher
assistance�s campus, is eligible land for purposes of this program.

���� c.��� The board shall give
consideration to factors including rural, suburban, and urban geographic
location and may qualify the identified land or space in a building as eligible
land if the board, in consultation with the authority and the Secretary of
Higher Education or the secretary�s designee, determines that the public
institution of higher education has shown that the use of the land or space
will be consistent with the requirements of the program and the plan submitted
by the public institution of higher education.� The aggregate amount of
qualified land or space under this section shall not exceed 150,000 square feet
per public institution of higher education and, when combined with the
aggregate amount of qualified land or space under section 6 of P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill), shall not exceed 1.5 million
square feet within the State.� The board shall maintain an accounting of the
vacant land and space of public institutions of higher education that have been
approved as tax-free New Jersey areas and shall stop accepting applications for
approval of tax-free New Jersey areas when that maximum amount has been
reached.

���� d.��� A public institution of
higher education shall not relocate or eliminate any academic programs,
administrative programs, offices, housing facilities, dining facilities,
athletic facilities, or any other facility, space, or program that actively
serves students, faculty, or staff in order to create vacant land or space to
be utilized for the Innovate New Jersey Program.� Nothing in P.L.��� , c.��� (C.�������
) (pending before the Legislature as this bill) shall be deemed to waive or
impair any rights or benefits of employees of a public institution of higher
education that otherwise would be available to them pursuant to the terms of
agreements between the certified representatives of those employees and their
employers.� Services or work currently performed by public employees of a
public institution of higher education or future work that is similar in scope
and nature to the work being currently performed by public employees shall not
be contracted out or privatized by a public institution of higher education or
by an affiliated entity or associated entity of a public institution of higher
education.� For the purpose of this section, an affiliated entity or associated
entity shall not include a business that is participating in the program.

���� 6.��� (New section)� a.�
Subject to the limitations prescribed in this section, the following shall
constitute the eligible land of a private institution of higher education:

���� (1)� any vacant land or vacant
space in any building located on a campus of a private institution of higher
education; and

���� (2)� a business incubation
facility having a bona fide affiliation with a private institution of higher
education with the approval of the Innovate New Jersey Board.

���� In order for there to be a
bona fide affiliation of a business incubation facility with a private
institution of higher education, the business incubation facility and the
private institution of higher education shall have established a partnership to
provide assistance and physical space to a new business.� The business
incubation facility and the private institution of higher education shall
directly work towards the goal of jointly creating jobs and incubating new
startup businesses and the mission and activities of the business incubation
facility shall align with or further the academic mission of the private
institution of higher education.

���� b.��� The board shall give
consideration to factors including rural, suburban, and urban geographic
location and may qualify the identified land or space in a building as eligible
land if the board, in consultation with the authority and the Secretary of
Higher Education or the secretary�s designee, determines that the public
institution of higher education has shown that the use of the land or space
will be consistent with the requirements of the program and the plan submitted
by the public institution of higher education.� The aggregate amount of
qualified land or space under this section shall not exceed 150,000 square feet
per private institution of higher education and, when combined with the
aggregate amount of qualified land or space under section 5 of P.L.��� , c.��� (C.������
) (pending before the Legislature as this bill), 1.5 million square feet within
the State.� The board shall maintain an accounting of the vacant land and space
of private institutions of higher education that have been approved as tax-free
New Jersey areas and shall stop accepting applications for approval of
tax-free New Jersey areas when that maximum amount has been reached.

���� c.��� A private institution of
higher education shall not relocate or eliminate any academic programs,
administrative programs, offices, housing facilities, dining facilities,
athletic facilities, or any other facility, space, or program that actively
serves students, faculty, or staff in order to create vacant land or space to
be utilized for the Innovate New Jersey Program.

���� 7.��� (New section)� a.� The
president or chief executive officer of any public institution of higher
education seeking to sponsor a tax-free New Jersey area that has eligible land,
specified under section 5 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill), to be designated as a tax-free New Jersey area shall
submit a plan to the Innovate New Jersey Board that:

���� (1)� specifies the eligible
land or space the public institution of higher education wants to include;

���� (2)� describes the type of
business or businesses that may locate to that land space and explains how
those types of businesses align with or further the academic mission of the
public institution of higher education and how they would have positive
community and economic benefits; and

���� (3)� describes the process the
public institution of higher education will follow to select participating
businesses.

���� b.��� At least 30 days prior
to submitting the plan described pursuant to subsection a. of this section, the
public institution of higher education shall provide the municipality or
municipalities in which the proposed tax-free New Jersey area is located, the applicable
public institution of higher education faculty senate, union representatives,
and the campus student government with a copy of the plan.� Before approving or
rejecting the plan submitted by the president or chief executive officer of a
public institution of higher education, the board shall provide a copy of the
plan to the authority and the Secretary of Higher Education.

���� c.��� In evaluating the plan,
the board shall examine the merits of the plan, including, but not limited to,
compliance with the provisions of P.L.��� , c.��� (C.������� ) (pending before
the Legislature as this bill), including whether the plan exceeds the aggregate
amount of qualified land or space provided under sections 5 or 6 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill), the
reasonableness of the economic and fiscal assumptions contained in any
supporting documentation, and the potential of the proposed project to create
new jobs.� Preference shall not be given based on the time of submission of the
plan provided that any submission deadline established by the board shall be
met.

���� d.��� A public institution of
higher education may amend its approved plan, provided that the public
institution of higher education shall not violate the terms of any lease with a
business located in the approved tax-free New Jersey area.� If a business
located in a tax-free New Jersey area does not have a lease with a public
institution of higher education, and the business is terminated from the
Innovate New Jersey Program pursuant to section 20 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), and subsequently
does not relocate outside of the tax-free New Jersey area, the public
institution of higher education may amend its approved plan to allocate an
amount of vacant land or space equal to the amount of space occupied by the
business that is terminated.� The amendment shall be approved pursuant to the
procedures and requirements established pursuant to this section.

���� e.��� A public institution of
higher education shall not accept any application to locate in a tax-free New
Jersey area from a business, pursuant to section 9 of P.L.��� , c.���
(C.����� ���) (pending before the Legislature as this bill), that would compete
with other businesses in the same municipality but outside the tax-free New
Jersey area, and the board shall reject any application submitted pursuant to
this section upon determining that the business would compete with other
businesses in the same municipality but outside the tax-free New Jersey area.

���� f.���� A public institution of
higher education approved for participation in the Innovate New Jersey Program
shall not charge a new business for expenses for land or vacant space, utility
services, or consultation services.

���� 8.��� (New section)� a.� The
president or chief executive officer of any private institution of higher
education seeking to sponsor a tax-free New Jersey area that has eligible land,
specified under section 6 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill), to be designated as a tax-free New Jersey area shall
submit a plan to the Innovate New Jersey Board that:

���� (1)� specifies the eligible
land or space the private institution of higher education wants to include;

���� (2)� describes the type of
business or businesses that may locate on that land or in that space and
explains how those types of businesses align with or further the academic
mission of the private institution of higher education and how they would have
positive community and economic benefits; and

���� (3)� describes the process the
private institution of higher education will follow to select participating
businesses.

���� b.��� At least 30 days prior
to submitting the plan described pursuant to subsection a. of this section, the
private institution of higher education shall provide the municipality or
municipalities in which the proposed tax-free New Jersey area is located with a
copy of the plan.� Before approving or rejecting the plan submitted by the
president or chief executive officer of a private institution of higher
education, the board shall provide a copy of the plan to the authority and the
Secretary of Higher Education.

���� c.��� In evaluating the plan,
the board shall examine the merits of the plan, including, but not limited to,
compliance with the provisions of P.L.��� , c.��� (C.�������� ) (pending before
the Legislature as this bill), including whether the plan exceeds the aggregate
amount of qualified land or space provided under sections 5 or 6 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill), the
reasonableness of the economic and fiscal assumptions contained in any
supporting documentation, and the potential of the proposed project to create
new jobs.� Preference shall not be given based on the time of submission of the
plan provided that any submission deadline established by the board shall be
met.

���� d.��� A private institution of
higher education may amend its approved plan, provided that the private
institution of higher education shall not violate the terms of any lease with a
business located in the approved tax-free New Jersey area.� If a business
located in a tax-free New Jersey area does not have a lease with a private
institution of higher education, and the business is terminated from the
Innovate New Jersey Program pursuant to section 20 of P.L.��� , c.��� (C.����� ���)
(pending before the Legislature as this bill), and subsequently does not
relocate outside of the tax-free New Jersey area, a private institution of
higher education may amend its approved plan to allocate an amount of vacant
land or space equal to the amount of space occupied by the business that is
terminated.� The amendment shall be approved pursuant to the procedures and
requirements set forth in this section.

���� e.��� A private institution of
higher education shall not accept any application to locate in a tax-free New
Jersey area from a business, pursuant to section 9 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), that would compete
with other businesses in the same municipality but outside the tax-free New
Jersey area, and the board shall reject any application submitted pursuant to
this section upon determining that the business would compete with other
businesses in the same municipality but outside the tax-free New Jersey area.

���� f.���� A private institution
of higher education approved for participation in the Innovate New Jersey
Program shall not charge a new business for expenses for land or vacant space,
utility services, or consultation services.

���� 9.��� (New section)� a.� An
institution of higher education that sponsors a tax-free New Jersey area shall
solicit and accept applications from a new business to locate in a tax-free New
Jersey area.� An application for eligibility shall be consistent with
the plan of the institution of higher education that has been approved pursuant
to sections 7 or 8 of P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill).� A new business that wants to locate in a tax-free New
Jersey area shall submit an application to the sponsoring institution of
higher education by December 31, 2020.

���� b.��� The sponsoring institution
of higher education shall provide the application and all supporting
documentation from any new business it decides to accept into its tax-free New
Jersey area to the Innovate New Jersey Board for review and approval.� The
application shall be in a form prescribed by the board and shall contain all
information the board determines is necessary to properly evaluate the new
business's application, including, but not limited to:

���� (1)� the name, address, and
employer identification number of the new business;

���� (2)� a description of the
eligible land or space the new business will use;

���� (3)� the terms of the lease
agreement, if applicable, between the sponsoring institution of higher
education and the new business; and

���� (4) whether or not the land or
space being used by the new business is being transferred or sublet to the new
business from some other business.

���� The application shall include
a certification by the new business that it meets the eligibility criteria
specified in section 12 of P.L.��� , c.��� (C.������� ) (pending before the Legislature
as this bill) and will align with or further the academic mission of the
sponsoring institution of higher education, and that the new business's
participation in the Innovate New Jersey Program will have positive community
and economic benefits.� The application shall include information concerning
whether the new business competes with other businesses in the same community
but outside the tax-free New Jersey area and a description of how the new
business plans to recruit employees from the local workforce.

���� c.��� The Innovate New
Jersey Board shall review the application and documentation within 60 days of
receipt and may reject the application upon a determination that the new
business does not meet the eligibility criteria in section 12 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill), has submitted
an incomplete application, has failed to comply with subsection d. of this
section, or has failed to demonstrate that the new business's participation in
the Innovate New Jersey Program will have positive community and economic
benefits, which shall be evaluated based on factors including, but not limited
to, whether the new business competes with other businesses in the same
community but outside the tax-free New Jersey area as prohibited by sections 7
and 8 of P.L.��� , c.��� (C.������� ) (pending before the Legislature as this
bill).� If the board rejects the application, it shall provide notice of its
rejection to the sponsoring institution of higher education and the new
business.� If the board does not reject the application within 60 days, the new
business shall be accepted to locate in a tax-free New Jersey area.� The
sponsoring institution of higher education shall provide an accepted new
business with documentation of the new business�s acceptance in a form as
prescribed by the director which shall be used to demonstrate the new
business's eligibility for the tax benefits specified in sections 16 and 17 of P.L.���
, c.��� (C.������� ) (pending before the Legislature as this bill).

���� d.��� If a public institution
of higher education proposes to enter into a lease with a new business for
underutilized property with a term greater than 10 years, including any options
to renew, or for underutilized property of up to 150,000 square feet, the
public institution of higher education, at the same time as the application is
provided to the Innovate New Jersey Board, also shall submit the lease for
review to the board.� If the authority does not disapprove of the lease terms
within 30 days, the lease shall be deemed approved.� If the board disapproves
the lease terms, the public institution of higher education shall submit
modified lease terms to the board for review.� The board's 60 day review period
is suspended while the authority is reviewing the lease and during the time it
takes the public institution of higher education to modify the lease terms.

���� e.��� Except as otherwise
provided in law, proprietary information or supporting documentation submitted
by a new business to a sponsoring institution of higher education shall only be
utilized for the purpose of evaluating a new business's application or
compliance with the provisions of P.L.��� , c.��� (C.������� ) (pending before
the Legislature as this bill) and shall not otherwise be disclosed.� A person
who willfully discloses proprietary information to a third party for any other
purpose whatsoever shall be guilty of a crime of the fourth degree.

���� 10.� (New section)� a.� At the
conclusion of the term of a lease between the sponsoring institution of higher
education and a new business for underutilized property in a tax-free New
Jersey area at a sponsoring institution of higher education, the leased
underutilized property and any improvements thereon shall revert to the
sponsoring institution of higher education, unless the lease is renewed.

���� b.��� If, at any time, the
sponsoring institution of higher education or the authority determines that a
new business no longer satisfies any of the eligibility criteria specified in
section 12 of P.L.��� , c. (C. ��� ) (pending
before the Legislature as this bill), the sponsoring institution of higher
education shall recommend to the authority that the authority terminate, or the
authority on the authority�s own initiative shall immediately terminate, a new
business's participation in the Innovate New Jersey Program.� The business
shall be notified of the termination by a method which allows for verification
of receipt of the termination notice.� A copy of the termination notice shall
be sent to the director.� Upon termination, the new business shall not be
eligible for the tax benefits specified in sections 16 and 17 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill) for that or
any future taxable year.� Upon termination, the lease or contract between the
sponsoring institution of higher education and the new business shall be
rescinded, effective 30 days after the authority mailed its termination notice
to the new business and the land or space and any improvements thereon shall
revert to the sponsoring institution of higher education.

���� 11.� (New section) a. Each institution
of higher education participating in the Innovate New Jersey Program shall
adopt a conflict of interest policy.� The conflict of interest policy shall
provide, as the policy relates to the program:

���� (1)� as a general principle,
that service as an official of the institution of higher education shall not be
used as a means for private benefit or inurement for the official, a relative
thereof, or any entity in which the official, or relative thereof, has a
business interest;

���� (2)� an official who is a
vendor or employee of a vendor of goods or services to the institution of
higher education, or who has a business interest in the vendor, or whose
relative has a business interest in the vendor, shall not vote on, or
participate in the administration by the institution of higher education, as
the case may be, of any transaction with the vendor; and

���� (3)� upon becoming aware of an
actual or potential conflict of interest, an official shall advise the
president or chief executive officer of the institution of higher education, as
the case may be, of the official�s or a relative's business interest in any
existing or proposed vendor with the institution of higher education.� Each institution
of higher education shall maintain a written record of all disclosures of
actual or potential conflicts of interest made pursuant to this subsection, and
shall report a disclosure, on a calendar year basis, by January 31st of each
year, to the auditor working on behalf of the institution of higher education.�
The institution of higher education shall forward the report to the authority
and the Secretary of Higher Education.� The authority shall make the report
available to the public.

���� b.��� For the purposes of a
conflict of interest policy adopted pursuant to subsection a. of this section:

���� (1)� an official of an institution
of higher education has a business interest in an entity if the individual: (a)
owns or controls 10 percent or more of the stock of the entity or one percent
in the case of an entity which is regularly traded on an established securities
exchange; or (b) serves as an officer, director, or partner of the entity;

���� (2)� a relative of an official
of an institution of higher education means any person living in the same
household as the individual and any person who is a direct descendant of that
individual's grandparents or the spouse of the descendant; and

���� (3)� an official of an institution
of higher education means an employee at the level of dean and above as well as
any other employee with decision-making authority over the Innovate New Jersey
Program.

���� 12.� (New section) In order to
participate in the Innovate New Jersey Program, a new business shall satisfy
the following criteria:

���� a.��� A new business shall be:

���� (1)� in the formative stage of
development; or

���� (2)� engaged in the design,
development, and introduction of new biotechnology, information technology,
re-manufacturing, advanced materials, processing, engineering or electronic
technology products, or innovative manufacturing processes, and meet any other requirements
for a high technology business as the authority shall develop.

���� b.��� The mission and
activities of the new business shall align with or further the academic mission
of the institutions of higher education sponsoring the tax-free New Jersey area
in which the new business seeks to locate, and the new business's participation
in the program shall have positive community and economic benefits as
determined by the board.

���� c.��� The new business shall
demonstrate that the new business will, in its first year of operation, create
net new jobs.� After its first year of operation, the new business shall
maintain net new jobs.� The average number of employees of the new business and
its related persons in the State during the year shall equal or exceed the sum
of:

���� (1)� the average number of
employees of the new business and its related persons in the State during the
year immediately preceding the year in which the new business submits its
application to locate in a tax-free New Jersey area; and

���� (2)� net new jobs of the new
business in the tax-free New Jersey area during the year.

���� The average number of
employees of the new business and its related persons in the State shall be
determined by adding together the total number of employees of the new business
and its related persons in the State on March 31st, June 30th, September 30th,
and December 31st and dividing the total by the number of those dates occurring
within that year.

���� d.��� Except as provided in
subsections h. and i. of this section, at the time a new business submits its
application for the Innovate New Jersey Program, the new business shall be a
new business to the State.

���� e.��� The new business may be
organized as a corporation, a partnership, limited liability company, or a sole
proprietorship.

���� f.���� Upon completion of its
first year in the Innovate New Jersey Program and thereafter, the new business
shall complete and file the annual report required under section 19 of P.L.��� ,
c.��� (C.������� ) (pending before the Legislature as this bill).

���� g.��� Except as provided in
subsections h. and i. of this section, the new business shall not be engaged in
a line of business that is currently or was previously conducted by the new
business or a related person in the last five years in this State.

���� h.��� If a business does not
satisfy the eligibility standard set forth in subsections d. or g. of this
section, because at one point in time the business operated in the State but
moved its operations out of the State on or before the effective date of P.L.���
, c.��� (C.�������� ) (pending before the Legislature as this bill), the
authority shall grant that business permission to apply to participate in the
Innovate New Jersey Program if the authority determines that the business has
demonstrated that it will substantially restore the jobs in the State that the
business previously moved out of State.

���� i.���� If a business seeks to
expand its current operations in the State into a tax-free New Jersey area but
the business does not qualify as a new business because it does not satisfy the
criteria in subsection g. of this section, the authority shall grant the
business permission to apply to participate in the Innovate New Jersey Program
if the authority determines that the business has demonstrated that it will
create net new jobs in the tax-free New Jersey area and that the business or
any related person has not eliminated any jobs in the State in connection with
this expansion.

���� j.���� A new business shall be
in compliance with all State and federal worker protection and environmental
laws and regulations.

���� k.��� A new business shall not
owe past due State or federal taxes or local property taxes.

���� l.���� A business that has
successfully completed residency in a business incubation facility, subject to
approval of the authority, may apply to participate in the Innovate New Jersey
Program provided that the business locates in a tax-free New Jersey area,
notwithstanding the fact that the business may not constitute a new business in
the State.

���� 13.� (New section)� a.� A new
business submitting an application for approval into the Innovate New Jersey
program, as part of the application, shall:

���� (1)� agree to allow the
director to share its tax information with the authority and the sponsoring institution
of higher education;

���� (2)� agree to allow the
Department of Labor and Workforce Development to share its employer information
with the authority and the sponsoring institution of higher education;

���� (3)� allow the authority and
the sponsoring institution of higher education access to any and all books and
records the authority or sponsoring institution of higher education may require
to monitor compliance;

���� (4)� include performance
benchmarks, including the number of net new jobs that shall be created, the
schedule for creating those jobs, and details on job titles and expected
salaries;

���� (5)� provide the following
information to the authority and sponsoring institution of higher education
upon request:

���� (a)�� the prior three years of
federal and State income or franchise tax returns, unemployment insurance
returns, real property tax bills, and audited financial statements; and

���� (b) the employer
identification or social security numbers for all related persons to the new
business, including those of any members of a limited liability company or
partners in a partnership;

���� (6)� provide a clear and
detailed presentation of all related persons to the new business to assure the
authority that jobs are not being shifted within the State; and

���� (7)� certify, under penalty of
perjury, that the new business is in substantial compliance with all
environmental, worker protection, and local, State, and federal tax laws, and
that it satisfies all the eligibility requirements to participate in the
program.

���� b.��� The application shall
specify the consequences for failure to meet the performance benchmarks, as
determined by the new business and the sponsoring institution of higher
education, including one or more of the following consequences:

���� (1)� the suspension of the new
business's participation in the Innovate New Jersey Program for one or more tax
years as specified in the application;

���� (2)� the termination of the
new business's participation in the program; or

���� (3)� the proportional recovery
of tax benefits awarded under the program as specified in section 20 of P.L.���
, c.��� (C.������ ) (pending before the Legislature as this bill).

���� 14.� (New section) The
authority and the director shall disclose publicly the names and addresses of
every new business located within a tax-free New Jersey area.� The authority
and the director shall make available to the public and include in the annual
report required pursuant to section 19 of P.L.��� , c.��� (C.������� ) (pending
before the Legislature as this bill) any other information contained in a new
business�s application and annual report, including the projected number of net
new jobs to be created, as the authority determines is relevant and necessary
to evaluate the success of the Innovate New Jersey Program.

���� 15.� (New section) The
following types of businesses are prohibited from participating in the Innovate
New Jersey Program.

���� a.��� retail and wholesale
businesses;

���� b.��� restaurants;

���� c.��� real estate brokers;

���� d.��� law firms;

���� e.��� medical or dental
practices;

���� f.���� real estate management
companies;

���� g.��� hospitality-related
businesses;

���� h.��� finance and financial
services;

���� i.���� businesses providing
personal services;

���� j.���� businesses providing
business administrative or support services, unless the business has received
permission from the authority to apply to participate in the program upon
demonstration that the business will create no fewer than 100 net new jobs in a
tax-free New Jersey area;

���� k.��� accounting firms; and

���� l.���� businesses providing
utility services or are otherwise engaged in the generation or distribution of
electricity, the distribution of natural gas, or the production of steam
associated with the generation of electricity.

���� 16.� (New section)� a.� A new
business that is accepted into the Innovate New Jersey Program and locates in a
tax-free New Jersey area shall be exempt for a period of five years, or for the
duration of the time that the new business is participating in the program,
whichever is shorter, from the following taxes as applicable to the new
business:

���� (1)� the tax imposed pursuant
to section 5 of P.L.1945, c.162 (C.54:10A-5);

���� (2)� the tax imposed pursuant
to the �New Jersey Gross Income Tax Act,� N.J.S.54A:1-1 et seq.;

���� (3)� the tax imposed pursuant
to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3);

���� (4)� the tax imposed pursuant
to section 1 of P.L.1950, c.231 (C.17:32-15);

���� (5)� the tax imposed pursuant
to N.J.S.17B:23-5.

���� b.��� A new business that is
accepted into the program and locates in a tax-free New Jersey area shall be
exempt for a period of 10 years, or for the duration of the time that the new
business is participating in the program, whichever is shorter, from the tax
imposed pursuant to

the �Sales and Use Tax Act,� P.L.1966, c.30
(C.54:32B-1 et seq.).

���� 17.� (New section) The land,
structures, facilities, and buildings wherein a new business, as that term is
defined pursuant to section 2 of P.L.��� , c.��� (C.������� ) (pending before
the Legislature as this bill), that is approved for participation the Innovate
New Jersey Program established pursuant to P.L.��� , c.��� (C.������� )
(pending before the Legislature as this bill) and locates in a tax-free New
Jersey area, as that term is defined pursuant to section 2 of P.L.��� , c.���
(C.������� ) (pending before the Legislature as this bill), shall be exempt for
a period of five years, or for the duration of the time that the new business
is participating in the program, whichever is shorter, from taxation as real
property under chapter 4 of Title 54 of the Revised Statutes, for as long as
the new business remains in the program and within a tax-free New Jersey area.

���� 18.� (New section)� a.� To
implement the Innovate New Jersey Program, the authority shall establish and
maintain a special non-lapsing, revolving fund to be known as the �Innovate New
Jersey Grant Fund� for the purpose of providing grants to sponsoring
institutions of higher education to be used for start-up costs related to
necessary tenant fit-up improvements to the facilities of a sponsoring
institution of higher education, and for consulting service and technical
assistance to new businesses within a business incubation facility.

���� b.��� The fund may be credited
with:

���� (1)� moneys made available by
the authority for the purpose of the fund; and

���� (2)� moneys received by the
authority from any public or private donations.

���� c.��� The Innovate New
Jersey Board shall consider a request for a grant from the fund in a manner
established by the board.� The amount of any grant shall not exceed $125,000 a
year for the first three years following board approval for a business
incubation facility approved by the board.

���� 19.� (New section)� a.� The
authority shall prepare an annual report on the Innovate New Jersey Program and
deliver the report to the Governor and, pursuant to section 2 of P.L.1991,
c.164 (C.52:14-19.1), to the Legislature.� The report shall include the number
of business applicants, the number of new businesses approved, the names and
addresses of the new businesses located within a tax-free New Jersey area, the
total amount of benefits distributed, the benefits received per new business,
the number of net new jobs created, the number of net new jobs created per new
business, the amount of new investment per new business, the types of
industries represented, and any other information as the authority determines
is necessary to evaluate the progress of the Innovate New Jersey Program.

���� b.��� The authority shall
create an Internet website for the program which shall include, but not be
limited to, the following information:

���� (1)� a list of the resources
available to potential new businesses;

���� (2)� a complete listing of
business incubation facilities located in the State;

���� (3)� a description of the
economic incentives for New Jersey-based businesses with the criteria for each
program; and

���� (4)� the contact information
for the authority and the Business Action Center.

���� c.��� Any new business located
in a tax-free New Jersey area shall submit an annual report to the authority in
a form and manner and with any information as prescribed by the authority in
consultation with the director.� The information shall be sufficient for the
authority and the director to: (1) monitor the continued eligibility of the new
business and its employees to participate in the program and receive the tax
benefits described in sections 16 and 17 of P.L. , c. (C.�������
) (pending before the Legislature as this bill); (2) evaluate the progress of
the program; and (3) prepare the annual report required by subsection a. of
this subsection.� The annual report shall include information regarding the
wages paid by a new business during the year to its employees employed in the
net new jobs created and maintained in the tax-free New Jersey area.

���� 20.� (New section)� If the
authority determines that any business located in a tax-free New Jersey area
and participating in the Innovate New Jersey Program has acted fraudulently in
connection with its participation in the program, the business shall be:

���� a.��� immediately terminated
from the program;

���� b.��� subject to applicable
criminal penalties, including, but not limited to, the crime of offering a
false instrument for filing pursuant to N.J.S.2C:21-3; and

���� c.��� required in that year to
pay back the total value of the tax benefits described in sections 16 and 17 of
P.L.��� , c.��� (C.������� ) (pending before the Legislature as this bill) that
the business received and that the employees of the business have received up
to the date of that finding.� The amount required to be paid back shall be
reported on any form the director may require.

���� 21.� (New section)� The authority,
in consultation with the Innovate New Jersey Board and the Secretary of Higher
Education, shall adopt rules and regulations, pursuant to the
"Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.),
necessary to implement the provisions of P.L.��� , c.��� (C.������� ) (pending
before the Legislature as this bill), including, but not limited to,
establishing the process for the submission of plans and approvals of tax-free
New Jersey areas and the eligibility criteria that shall be applied in
evaluating those plans and approvals, establishing the process for the
evaluation and possible rejection of applications, the eligibility criteria
that shall be applied in evaluating applications, and the process for
terminations from the Innovate New Jersey Program and administrative appeals of
any terminations.

���� 22.� R.S.54:4-3.6 is amended
to read as follows:

���� 54:4-3.6.� The following
property shall be exempt from taxation under this chapter: all buildings
actually used for colleges, schools, academies or seminaries, provided that if
any portion of
[
such
]

those

buildings are leased to profit-making organizations or otherwise used for
purposes which are not themselves exempt from taxation,
[
said
]

that

portion
, except any building or portion thereof within a tax-free New Jersey
area established pursuant to P.L.��� , c. (C.
) (pending before the Legislature as this bill),
shall be
subject to taxation and the remaining portion only shall be exempt; all
buildings actually used for historical societies, associations
,
or
exhibitions, when owned by the State, county
,
or any political
subdivision thereof or when located on land owned by an educational institution
which derives its primary support from State revenue; all buildings actually
and exclusively used for public libraries,
[
asylum
]

asylums,
�
or schools for adults and children with intellectual disabilities; all
buildings used exclusively by any association or corporation formed for the
purpose and actually engaged in the work of preventing cruelty to animals; all
buildings actually and exclusively used and owned by volunteer first-aid
squads, which squads are or shall be incorporated as associations not for
pecuniary profit; all buildings actually used in the work of associations and
corporations organized exclusively for the moral and mental improvement of men,
women and children, provided that if any portion of a building used for that
purpose is leased to profit-making organizations or is otherwise used for
purposes which are not themselves exempt from taxation, that portion shall be
subject to taxation and the remaining portion only shall be exempt; all
buildings actually used in the work of associations and corporations organized
exclusively for religious purposes, including religious worship, or charitable
purposes, provided that if any portion of a building used for that purpose is
leased to a profit-making organization or is otherwise used for purposes which
are not themselves exempt from taxation, that portion shall be subject to
taxation and the remaining portion shall be exempt from taxation, and provided
further that if any portion of a building is used for a different exempt use by
an exempt entity, that portion shall also be exempt from taxation; all
buildings, other than those exempt from taxation pursuant to section 3 of
P.L.2021, c.17 (C.54:4-3.6j), actually used in the work of associations and
corporations organized exclusively for hospital purposes, provided that if any
portion of a building used for hospital purposes is leased to profit-making
organizations or otherwise used for purposes which are not themselves exempt
from taxation, that portion shall be subject to taxation and the remaining
portion only shall be exempt; all buildings owned or held by an association or
corporation created for the purpose of holding the title to
[
such
]

those

buildings as are actually and exclusively used in the work of two or more
associations or corporations organized exclusively for the moral and mental
improvement of men, women and children; all buildings owned by a corporation
created under or otherwise subject to the provisions of Title 15 of the Revised
Statutes or Title 15A of the New Jersey Statutes and actually and exclusively
used in the work of one or more associations or corporations organized
exclusively for charitable or religious purposes, which associations or
corporations may or may not pay rent for the use of the premises or the
portions of the premises used by them; the buildings, not exceeding two,
actually occupied as a parsonage by the officiating clergymen of any religious corporation
of this State, together with the accessory buildings located on the same
premises; the land whereon any of the buildings hereinbefore mentioned are
erected, and which may be necessary for the fair enjoyment thereof, and which
is devoted to the purposes above mentioned and to no other purpose and does not
exceed five acres in extent; the furniture and personal property in
[
said
]

those

buildings if used in and devoted to the purposes above mentioned; all property
owned and used by any nonprofit corporation in connection with its curriculum,
work, care, treatment and study of men, women, or children with intellectual
disabilities shall also be exempt from taxation, provided that
[
such
]

the
nonprofit
corporation conducts and maintains research or professional
training facilities for the care and training of men, women, or children with
intellectual disabilities; provided, in case of all the foregoing, the
buildings, or the lands on which they stand, or the associations, corporations
or institutions using and occupying them as aforesaid, are not conducted for
profit, except that the exemption of the buildings and lands used for
charitable, benevolent or religious purposes shall extend to cases where the
charitable, benevolent or religious work therein carried on is supported partly
by fees and charges received from or on behalf of beneficiaries using or
occupying the buildings; provided the building is wholly controlled by and the
entire income therefrom is used for
[
said
]

those

charitable, benevolent
,
or religious purposes; and any tract of land
purchased pursuant to subsection (n) of section 21 of P.L.1971, c.199
(C.40A:12-21), and located within a municipality, actually used for the
cultivation and sale of fresh fruits and vegetables and owned by a duly
incorporated nonprofit organization or association which includes among its
principal purposes the cultivation and sale of fresh fruits and vegetables,
other than a political, partisan, sectarian, denominational or religious
organization or association.� The foregoing exemption shall apply only where
the association, corporation or institution claiming the exemption owns the
property in question and is incorporated or organized under the laws of this State
and authorized to carry out the purposes on account of which the exemption is
claimed or where an educational institution, as provided herein, has leased
[
said
]

the

property
in question
to a historical society or association or to a
corporation organized for
[
such
]

those

purposes and created under or otherwise subject to the provisions of Title 15
of the Revised Statutes or Title 15A of the New Jersey Statutes.

���� As used in this section
"hospital purposes" includes health care facilities for the elderly,
such as
:
nursing homes; residential health care facilities; assisted
living residences; facilities with a Class C license pursuant to P.L.1979,
c.496 (C.55:13B-1 et al.), the "Rooming and Boarding House Act of
1979"; similar facilities that provide medical, nursing or personal care
services to their residents; and that portion of the central administrative or
service facility of a continuing care retirement community that is reasonably
allocable as a health care facility for the elderly.

(cf: P.L.2021, c.17, s.5)

���� 23.� This act shall take
effect immediately, but shall remain inoperative for 60 days following the date
of enactment.

STATEMENT

���� This bill, entitled the "Innovate
New Jersey Act," creates the Innovate New Jersey Program (program) to
allow public and private colleges, universities, and community colleges in New
Jersey to be able to apply to have vacant space or land on their campuses
designated as tax-free areas for the purpose of creating incubators for certain
new and expanding businesses.� The area designated for a business incubator may
be no more than 150,000 square feet at any one college or university and no
more than 1.5 million square feet of business incubator space authorized for
the State. �Participating colleges or universities may not utilize space that
is currently being used for academic purposes to open a business incubator.�
Business incubator programs which currently exist and meet the program�s
qualifications criteria may apply for approval under the program.

���� The program transforms vacant
land and building space on the campuses of institutions of higher education
into a �tax-free New Jersey area� (tax-free area) for qualifying businesses.�
This creates the opportunity for businesses to engage in commerce in a zero tax
environment and allows businesses to leverage the assets of the college or university.
�Under the bill, these businesses will not be subject to State corporate or income
tax or franchise fees or any local property taxes for five years, and will not
have any sales tax liability for 10 years.

���� Applications for acceptance
into the program are to be decided by an Innovate New Jersey Board (board) to
be established within the Economic Development Authority (EDA).� The board
consists of five members, one member each designated by the Governor, the
Senate President, the Assembly Speaker, the Senate Minority Leader, and the
Assembly Minority Leader.� The board is to decide which colleges or
universities may allocate tax-free space for a business incubator and which
businesses are eligible to locate there.

���� A new business accepted into
the program is exempt for five years, or for the duration of the time that the
new business is participating in the program, whichever is shorter, from: 1)
the corporation business tax; 2) the gross income tax; 3) premiums taxes on
domestic and foreign insurers; and 4) local property taxes.� Further, the new
business is exempt for 10 years, or for the duration of the time that the new
business is participating in the program, whichever is shorter, from the sales
and use tax.

���� In order to locate in a
tax-free area: 1) A new business is to be in the formative stage of development
or engaged in the design, development, and introduction of new biotechnology,
information technology, remanufacturing, advanced materials, processing,
engineering, or electronic technology products, or innovative manufacturing
processes, and meet any other requirements for a high technology business as
the authority shall develop; 2) the missions and activities of the business are
to align with, or further the academic mission of the university or college in
the area in which the business seeks to locate; 3) a business will be required
to be a new business in the State or an expanding business that creates net new
jobs pursuant to a net-benefits test requiring that the business continue to
maintain net new jobs and employment numbers of the business and its related
companies throughout the State while in the program; and 4) the business�s
participation in the program is to have positive community and economic
effects.

���� The bill establishes an
�Innovate New Jersey Grant Fund� (fund) to provide grants to assist selected
colleges or universities with start-up costs related to necessary capital
improvements to college or university facilities, and service improvement including
consulting and technical assistance in order to open and operate an incubator.�
Grants are to be up to $125,000 a year for the first three years following
board approval for inclusion in the program.

���� A business that does not meet
its net new job creation performance standards is subject to a proportionate
reduction of benefits, suspension, termination, or any of the above.� In the
case of a business that acted fraudulently, the business would be immediately
terminated from the program, be subject to applicable criminal penalties
including the crime of offering a false instrument for filing in the first
degree, and be required to pay back all tax benefits that the company and its
employees have received.

���� In administering the program,
the EDA is to create a website for the program to include, but not be limited
to: 1) a list of the resources available to potential new businesses; 2) a
complete listing of business incubator facilities located in the State; 3) a
description of the economic incentives for New Jersey-based businesses with the
criteria for each program; and 4) the contact information for the authority and
the Business Action Center.