U. backs new innovation zones

The bill was approved by the Assembly Commerce and Economic Development Committee on March 11, but its prospects for becoming law remain uncertain amid the state’s tight financial situation.

The University has been involved with trying to get the bill passed into law.

“In the past, we have corresponded with the bill sponsors in support of the legislation,” Karen Jezierny, the University’s director of public affairs, said in an e-mail, adding that the University will likely express its support as the bill moves further through the legislative process.

According to the plan, an expanded Central Jersey zone would replace the current Greater New Brunswick zone, which surrounds Rutgers. The new zone would include the area surrounding Princeton University, including Princeton Borough, Princeton Township, East Windsor, West Windsor and Plainsboro. Companies within the zones would be eligible for special tax breaks, grants and loans, and could also secure funding to hire recent doctoral graduates of New Jersey universities.

Jezierny said that the zones allow businesses to “take advantage of specific state funding programs and tax programs designed to encourage business development and business expansion.”

She explained that universities and hospitals, which are the hubs of the zones, “support and encourage research and scientific development, and the innovation zone program seeks to leverage the research and the entrepreneurial interests of faculty and students.”

Democratic Assemblyman Upendra Chivukula, one of the bill’s sponsors and an electrical engineer, said that expanding the zones would foster expansion of digital media and biotechnology companies.

“We are trying to bring a clustering of hi-tech industries,” he said, such that one company can share intellectual property generated by another company.

Benefits for Princeton

The inclusion of Princeton in the zone would benefit the University by allowing “those University faculty and students who are interested in commercial ventures to pursue those interests conveniently and efficiently,” Jezierny said.

Peter Crowley, president and CEO of the Princeton Regional Chamber of Commerce, said the bill would enable local businesses to expand.

“The Princeton community already is an incubator for new business opportunities,” he said. “It has great talent, [is a] great educational institution, and to be able to leverage those by the tax advantages and the incentives that the innovation zone brings is value added.”

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Princeton Power Systems, which president and CEO Darren Hammell ’01 launched a month before he graduated, is one type of business that could benefit from the new legislation.

After formulating a business plan for the energy system manufacturing and design company in a course on high-tech entrepreneurship, Hammell, who was a computer science major, attracted more than $1 million in financing. As the company has grown over the last decade, Hammell said, he has taken advantage of various business incentive programs from the state. But, he added, his business could have received more state funding if Princeton were part of an innovation zone.

The biggest advantage to the zones, however, is not the money, he explained.

“When you have a number of companies that kind of cluster around a geographic area, the sum of the parts tends to be greater than the whole — there’s just a collaboration that’s hard to put your finger on,” he said, adding that when “people are meeting out at the bar or meeting at their kids’ soccer game, things like that ... [it] amplifies the capabilities of all the companies.”

Hammell said that while his company has largely moved past the stage where it requires a large amount of state funding, his business could still benefit.

“Having access to programs which help us hire people directly from Princeton ... would be great,” he said, adding that graduate students often leave the state after they receive their Ph.D.s.

The bill’s potential benefits would not just help the University, Chivukula stressed. “By including Princeton, I think the state of New Jersey ... derives a lot of benefit from that — the name and all that,” he said. “I see a win-win.”

Possible obstacles

While the bill cleared a hurdle by advancing through its first committee, passage would require funding at a time when state finances are stretched, Chivukula said.

“The current economic situation cuts both ways,” Jezierny said.

“Tax breaks may encourage business to start up and expand in the region — and although some business taxes would be forgone within the innovation zones, payroll taxes, property taxes, permit fees and other state and local revenues could grow if the program is successful,” she said.

But, she added, the legislature may be reluctant to expand tax breaks at a time when state revenues are scarce.

The budget proposed earlier this month by Republican Governor Chris Christie includes major cuts intended to close the state’s $10.7 billion deficit.

The bill is currently in the Assembly’s Appropriations Committee.