(TRENTON) – Legislation sponsored by Assembly Speaker Pro Tempore Jerry Green and Assembly members Shavonda E. Sumter, Patrick J. Diegnan, Jr., Bonnie Watson Coleman and Thomas P. Giblin to help transform ailing or obsolete health care facilities into productive health care centers once again was released Thursday by a Senate panel.
“Shifts in population, economic pressures and scientific advancement often lead to the construction of new hospital facilities and the closing of older hospitals,” said Green (D-Middlesex/Somerset/Union). “This is unfortunate for the communities that house these once productive hospitals because they often contribute greatly to local employment and tax revenue. This legislation would aid in repurposing former hospitals health in a positive transition to health centers that can still provide much needed support to the community.”
“If we can help transform these former hospitals into centers for the delivery of other health care and support services then we can achieve a win-win for our communities,” said Sumter (D-Bergen/Passaic). “Barnert Hospital in Paterson is a perfect example of a productive transformation from hospital to community health center. This bill would support transitions such as Barnert’s in other areas of the state.”
The bill (A-3043) would allow a developer to receive a credit against its corporation business tax or gross income tax liability for capital investments made to repurpose a former licensed health care facility as a licensed health care and health services support center. Current law does not provide a tax credit for this specific purpose.
The bill provides that a developer, upon application to and approval from the New Jersey Economic Development Authority (EDA), is allowed a tax credit of 75 percent of its capital investment, or up to 100 percent of its capital investment by determination of the EDA, made for the purpose of renovating and redeveloping a former licensed health care facility as a non-acute health care and health support services center. Annually for 10 years, the developer may apply 10 percent of its capital investment as a credit against its corporation business tax liability or gross income tax liability, so that the total value of the tax credit is equal to 75 percent of the capital investment, or up to 100 percent of its capital investment if so determined of the EDA.
“A closed hospital building can quickly turn into a neighborhood eyesore,” said Diegnan (D-Middlesex). “This bill provides an incentive for developers to transform former hospitals into functioning health centers in order to provide needed health services for the community and prevent these buildings from becoming nuisances.”
“Hospitals that close to make way for newer, more advanced facilities in other locations, take away jobs and leave the communities that housed them with a gap in health care services,” said Watson Coleman (D- Mercer/Hunterdon). “This bill helps retain important health services as well as jobs and tax revenue in communities that once housed hospitals that have relocated.”
“A hospital not only provides health services, but creates jobs. When they shutter, the impact on the communities that house them is great,” said Giblin (D-Essex/Passaic). “This bill would help revive these facilities so that they can continue to contribute to the physical and economic well-being of the community where they are located.”
The bill requires that the health care and health support services components of the repurposed facility comprise no less than 50 percent of the net leasable space of the repurposed facility, but this requirement may be waived by the EDA if it’s not economically feasible or if the inclusion of further non-health care and non-health support services elements would improve the utilization and development of the health care and health support services components.
In order for the developer to receive the tax credit, the bill requires that: (1) the developer must demonstrate to the EDA that its proposed capital investment would not destabilize the supply and delivery of acute care health services in its market, will yield a net positive benefit to the state and local government, and that the repurposing is likely to be realized with the provision of tax credits at the level requested but would not likely be accomplished by private enterprise without the tax credits; (2) the developer must make or acquire capital investments of at least $10 million; (3) the tenants of the repurposed facility must employ at least 100 full-time employees; (4) all construction projects entered into pursuant to the bill must contain a project labor agreement subject to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.) and the general contractor, construction manager, design-build team, or subcontractor for a construction project must be registered pursuant to the provisions of “The Public Works Contractor Registration Act;” and 5) the developer must apply for the tax credit within five years after the effective date of the bill, and submit its documentation for approval within eight years after the effective date of the bill.
The bill was released by the Senate Budget and Appropriations Committee.
It was approved 46-25-2 by the General Assembly in January.