South Jersey OPPORTUNITY ZONEProgram · Few people understand the impact that stock market volatility can have on their retirement plans. Statistically, your retirement plan is more

A SOUTHERN NEW JERSEY DEVELOPMENT COUNCIL PUBLICATION 2019 VOL. 1 A SOUTHERN NEW JERSEY DEVELOPMENT COUNCIL PUBLICATION

B U S I N E S S & F I N A N C E E D I T I O N

The Future of Small Businesses – and theLocal Economy – Remains Bright

Reducing Risk in RetirementIncome Planning

Free College

Enhancing Employer RetirementBenefits in a Digital World

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South Jersey and the

ProgramOPPORTUNITY

T A B L E O F C O N T E N T S

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President’s MessageHaving entered a new year tackling the implications of the recent tax overhaul studiously, it seems appropriate that the subject of our inaugural Chronicle issue of 2019 be Business & Finance.

Those of you in attendance for our Opportunity Zones seminar this past December will be familiar with the program. Brad Molotsky of Duane Morris was one of the panelists for that seminar and has contributed our cover story “SNJ and the Opportunity Zone Program – Time to Move Quickly” to generate a sense of urgency and incite involvement.

Andy Logue, President and COO of Republic Bank, advocates on behalf of small businesses in South Jersey. Despite being especially affected by the 2008 recession, Andy Logue proclaims through his article “The Future of Small Businesses – and the Local Economy – Remains Bright.”

Retirement insecurity is becoming a fast-growing issue across the nation. Enjoying those “golden years” earned after a lifetime of hard work requires diligence and planning, especially as we continue to increase life expectancy. Gary DeVicci of CPI Companies offers suggestions on how to adjust to a longer-than-expected retirement in “Reducing Risk in Retirement Income Planning.”

While on the topic of retirement, the digital age we have entered presents new opportunities for employer-based plan offerings. Brent Sheppard, Partner and Financial Advisor at Cadence Financial Management, encourages the corporate retirement plan industry to adopt new practices in “Enhancing Employer Retirement Benefits in a Digital World.”

As the demand for a highly skilled workforce continues to increase, so does the cost of tuition at colleges and universities that provide such training. The college debt burden faced by new graduates or those pursuing training in a new field is at an astonishingly and devastatingly high level. The effects of which could prevent many from such basic rights as owning a home and successfully planning for retirement. That is why programs such as “Free College,” offered through Atlantic Cape Community College and Q-STEP, an on-campus mentoring program at Rutgers-Camden detailed in “Bioscience Research Thrives at Rutgers-Camden,” offer increasingly necessary solutions.

We welcome your comments at [email protected]. To learn more about the SNJDC, contact us at (856) 228-7500 or visit snjdc.org.

Sincerely,

Marlene Z. AsseltaPresidentSouthern New Jersey Development Council

The Chronicle is Published byThe Southern New JerseyDevelopment CouncilEditor: Jane AsseltaPublisher: Marlene Z. AsseltaCreative and Design:Glenn Davila/Performance MarketingPrinting: Bellia PrintingAdvertising and Editorial Contact:Southern New Jersey Development Council900 Route 168, Suite D-4Turnersville, NJ 08012Phone: 856-228-7500Fax: 856-228-7511Email: [email protected]

The Future of Small Businesses - and the LocalEconomy - Remains Bright ....................................... 2

Reducing Risk in Retirement Income Planning .... 5

Free College ............................................................. 6

Enhancing Employer Retirement Benefitsin a Digital World ....................................................... 9

Bioscience Research Thrivesat Rutgers-Camden ................................................. 10

SNJ and the Opportunity Zone Program -Time to Move Quickly ............................................... 12

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Business and Finance in South Jersey

The Future of Small Businesses – and the Local Economy – Remains Bright

A recent survey1 conducted by the Federal Reserve Bank of Philadelphia, cited that optimism for future business growth in South Jersey remains strong. This includes new businesses emerging, as well as the advancement of existing businesses.

Many people don’t realize that it is small businesses – not giant corporations – that are the backbone of the U.S. economy. They make up 99 percent of all businesses, drive job growth and strengthen communities. Supporting the small businesses of our friends and neighbors will help local economies thrive – especially since many of those dollars will stay exactly where they were earned and spent. This support is crucial throughout the year, but for small businesses, one day in November tends to shine above the rest – Small Business Saturday.

Since its launch in 2010 by American Express, Small Business Saturday has been celebrated across the country to encourage holiday shoppers to support small businesses within their communities and spend money locally. This past holiday season, it resulted in a record-setting $17.8 billion spent at independent retailers and restaurants. A combined $103 billion has been spent on the nine annual Small Business Saturdays since the holiday was established.

In South Jersey and beyond, the future of small businesses remains bright. Millennials, who spend $600 billion annually and now account for a quarter of the U.S. population, are particularly drawn to them. Small businesses are nimble. They’re often able to offer a diverse product selection, personalized services and a unique customer experience, which is appealing to this new-age population of consumers.

Millennials represent more than 20 percent of the population in New Jersey, which is home to approximately 860,000 small businesses, according to the SBA. And entrepreneurship continues to be a growing trend, with many of these young people deciding to start their own companies. But for most, before their dreams can become a reality, they need to secure funding – which often means a loan from a bank.

Small business lending experienced a lengthy period of decline during and immediately after the recession but has rebounded in recent years. Promisingly, this past October, the SBA announced that over $30 billion had been lent to small businesses in fiscal year 2018 – businesses that otherwise would have no means of acquiring the capital.

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Andy LoguePresident and COO, Republic Bank

1 “ https://www.philadelphiafed.org/-/media/research-and-data/regional-economy/south-jersey-business-survey/2018/sj4q2018.pdf?la=en”

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B U S I N E S S A N D F I N A N C E E D I T I O N

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Reducing Riskin Retirement IncomePlanning

In 1999 my client Leon died, and I designed a lifetime income plan for his wife Miriam. After explaining the plan to her, her children and attorney, Miriam asked who I was referring to at age 100. I explained that it was her, and I had to make sure her income was secure for at least that long. Miriam is now age 99.

Longevity RiskThe number one concern people cite about retiring is outliving their money…for good reason.

25% of couples age 65 will have one spouse living to 97 or beyond. Especially concerning for women, as they often survive men by many years.

While there are other risks to successful retirement income planning, living longer than planned is perhaps the most concerning. In his book Don’t Worry, Retire Happy! economist Tom Hegna says, “Longevity isn’t just a risk in and of itself; it is a multiplier of all other retirement risks.”

Gary DeVicci, MSFS, CFP®, AEP


Market Volatility and Longevity PlanningSoftware for financial modeling recommends investment allocations weighted more toward stocks in the years when accumulating assets. As you get closer to retirement age the allocation tilts more toward bonds. Such models are too simplistic.

During the pre-retirement years when assets are being accumulated, retirement plans based on this modeling are missing any contingency for the life events listed above that could spell disaster.

When you retire and need income from the assets you have accumulated, such allocation modeling is a recipe for disaster.

Bond values move opposite to interest rates. Over the past 25+ years, as interest rates decreased the portfolio value of bonds increased. As interest rates have recently begun to rise, those gains are slowly being wiped out.

Few people understand the impact that stock market volatility can have on their retirement plans. Statistically, your retirement plan is more likely to succeed if you begin retirement during a market upturn. Unfortunately, there is no way to predict what will happen once you decide to retire.

What if you had retired in 1988, 1999 or 2007? In each case, the following year saw a major downturn of the stock market. How many retired in 2007 only to find themselves in need of a job in 2008?

Key Risks You Can’t Control• Market and Yield Volatility• Chronic Illness• Living Longer Than Planned• Premature Death

This is an extraordinary chance to take a new step

towards success.


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Free CollegeI’ve had the privilege of spending my professional life in higher education. As a result, I’ve been treated to countless stories of students who have achieved the incredible and of individuals who have transcended the most daunting challenges. I’ve also enjoyed seeing firsthand wonderfully groundbreaking advancements. Right now, we’re witnessing one of those very moments: Free College.

As president of Atlantic Cape Community College, I’m thrilled that our college was selected to be a part of New Jersey’s Community College Opportunity Grant (CCOG), which provides a last dollar scholarship of free tuition and fees for qualifying students.

For many, one of the biggest barriers to a college degree is the cost. New Jersey has taken that obstacle

away and is eliminating the worry about student loan debt with this opportunity. New Jersey stands ready to invest in its resident’s futures.

After meeting simple criteria, students could be on their way to gaining a life-changing education at zero cost. Atlantic and Cape May county students with adjusted gross incomes under $45,000 who have applied for federal and state aid and take classes with six or more credits will be eligible for the grant.

By Dr. Barbara Gaba, PhDPresident, Atlantic Cape Community College


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Enhancing Employer Retirement Benefits in a Digital World

Technology is exploding. Yet, while so much is changing so rapidly, the corporate retirement plan industry has been slow to adapt.

Embracing technology in the employer retirement benefits space can help reduce employer spend, improve participant outcomes, and create more attractive benefits for recruiting and retaining valuable employees. Plan sponsors can begin the process by gaining a better understanding of what they currently have available, what is on the market, and how it can integrate with their employees.

Fundamental Plan Changes Are Now Simple to ImplementMany changes in plan design that would have been labor intensive in the past are now simple to adopt. An easy way to begin improving your retirement plan is by implementing automatic enrollment, then automatic escalation.

There is mounting research that shows employees are accepting of both, but a coordinated communications strategy to help overcome employee hesitation is key. Think emails, infographics, videos, events, and meetings. Get creative; one plan drove participants to a website to opt out of automatic features by clicking “I will not accept free money;” and in that case, only 7% opted out.1

The Communication Tools You NeedMay Already Be in PlaceThe next step in enhancing your retirement plan is to see what you already have available to engage employees. Contact your record-keeper and consider all formats; paper notices, emails, text messaging, website, mobile app, posters, videos, events, and in-person support.

More touches with employees can lead to higher participation and deferral rates. Shlomo Benartzi, Professor of Behavioral Decision Making at UCLA Anderson School of Management writes, “Nudges can drive lasting behavior change … Digital nudging holds particular promise in the domain of retirement savings.” Furthermore, he states, “The digital world offers unprecedented scale: by fixing a single website or app, we can potentially help millions of people make better financial decisions.” 2

Employee EngagementWe foresee a future where an employee is engaging with their retirement plan just like they would with their personal bank or even social media. Digital nudges such as notifications to increase saving, or to rebalance investments, are far more powerful than a quarterly statement or annual meeting.

As you’re looking at ways to engage with employees, make certain you have methods for keeping them aware of how to best use the tools you provide. For example, if you have a robust system that allows employees to input other plans such as old 401(k)s, be sure they understand these features.

Brent H. SheppardPartner, Financial Advisor at Cadence Financial Management


1. Broadridge. (2017, January). Transforming The Participant Experience. Retrieved from Broadridge: https://www.broadridge.com/_assets/pdf/broadridge-transforming-the-participant-experpience-2017.pdf

2. Benartzi, S. (2017, December). How Digital Tools and Behavioral Economics Will Save Retirement. Retrieved from Harvard Business Review: https://hbr.org/2017/12/how-digital-tools-and-behavioral-economics-will-save-retirement

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Bioscience Research Thrives at Rutgers–Camden

Improving drugs that help fight addictions. Enhancing the quality of sleep. Identifying DNA at crime scenes. Stopping the spread of diseases. Preserving the planet in the face of global changes. Fighting the pervasiveness of cancer.

Rutgers University–Camden faculty and students are working every day on these complex goals. Students conduct significant scientific research with faculty while working on bachelor’s, master’s, and doctoral degrees. Their professors in biology, chemistry, computer science, mathematics, physics, and other science fields collaborate across disciplines to address worldwide concerns. “We are creating a new generation of scientists,” said Nir Yakoby, an associate professor of biology and director of the Rutgers–Camden Center for Computational and Integrative Biology.

Yakoby’s groundbreaking research on the fruit fly, which focuses on tissue development, has implications that may aid in the fight against cancer. His work has been widely published and awarded several notable grants.

A trademark of his research involves partnering with mathematicians and computer scientists, an approach shared by many science faculty at Rutgers–Camden. “The core of what we are doing is breaking boundaries and bringing fresh ideas and solutions to biological problems,” Yakoby said.

Rutgers University–Camden’s research faculty consistently attract millions of dollars in research funding to southern New Jersey from corporations, foundations, and government agencies such as the National Science Foundation and the National Institutes of Health.

Through the recent addition of the Nursing and Science Building with advanced science laboratories, and a recent commitment of a $2.5 million gift from biotechnology industry pioneer Sandy Stewart, a 1981 Rutgers–Camden biology graduate who earned a master’s degree in 1987, the university is positioned to expand its far-reaching research and to educate students in STEM fields who go on to careers that have impact around the world.

By Michael SepanicAssociate Chancellor for External Relations

Rutgers University–Camden


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SNJ and the Opportunity Zone Program – Time to Move QuicklyThe Opportunity Zone program offers significant capital gains tax benefits for taxpayers who invest in projects and businesses in low-income areas, allowing investors to delay, reduce and potentially eliminate capital gains taxes on appreciated assets or businesses located in and on Qualified Opportunity Zone investments.

Qualified Opportunity Zones are census tracts located in all 50 states in a low-income community. A detailed interactive map by state identifying the applicable opportunity zones is available, https://eig.org/opportunityzones.

As Forbes magazine indicated, there is likely $6 trillion of capital gains in the U.S. that represent potential available investment capital that could use this program to drive investment into applicable Qualified Opportunity Zone businesses or real estate.

The program is not limited to any specific product type nor does it mandate any job creation requirements as part of the investment in a Qualified Opportunity Zone. Thus, the program is applicable to any type of investor with capital gains from the sale of personal property or real property and to developers/owners of all property types.

Brad MolotskyPartner, Duane Morris LLP

On October 19, the U.S. Treasury

Department issued proposed

regulations for the federal Opportunity Zone tax incentive program created

under the 2017 Tax Cuts and Job Act.


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General OverviewUnder the Opportunity Zone program, individuals and other entities can delay paying federal income tax on capital gains until as late as December 31, 2026 – provided those gains are invested in Qualified Opportunity Funds investing 90 percent of their assets in businesses or tangible property located in a Qualified Opportunity Zone. In addition, the gains on investments in Qualified Opportunity Funds can be federal income tax-free if the investment is held for at least 10 years.

Specifically, appreciation on investments within Qualified Opportunity Funds that are held for at least 10 years are excluded from gross income. Thus, the longer one has an investment within a Qualified Opportunity Fund within an Opportunity Zone, the more one can reduce its capital gain – either by 10 percent or 15 percent, and if one stays in the zone for 10 years or more and the property or qualified business appreciated in value, the appreciation is not subject to capital gains tax at the federal level. The regulations as proposed give the investor/owner until December 31, 2047 to sell the business or property in order to take advantage of the no capital gains to be paid on the sale of appreciated assets rules.


DeadlinesWhile the benefits of the program can be advantageous, investors and developers seeking to capitalize on the Opportunity Zone program need to move quickly in order to take full advantage of the tax benefit as demand increases and the time period diminishes.

In other words, as the program only lasts until 2026, the seven-year ability to reduce capital gains by 15 percent will disappear if investments are not made by 2019 and the five-year ability to reduce capital gains by 10 percent will disappear if not made by 2021. Therefore, if one is interested in maximizing the value of the program and its value to investors, investors and developers need to move quickly to commence development and acquisitions in order to maximize the time periods available to invest their capital gains inside the program windows.

Additionally, in order to defer short- and long-term capital gains realized on the sale of property, the capital gain portion of the sale or disposition has to be reinvested within 180 days in a Qualified Opportunity Fund.

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(continued from page 5)Reducing Risk in Retirement Income PlanningEverything Changes When You Retire!The following chart illustrates the accumulated return of the S&P 500 over two 25-year periods of time, beginning in 1968 and 1985. Both have the same initial investment and no withdrawals. Although their patterns of return are significantly different, the average rate of return is remarkably similar.

The next chart illustrates the same investment periods with one change: an annual withdrawal of $65,000 from each portfolio. The results are vastly different. The 1985 portfolio leaves you with all your original principal at the end of the 25-year period.

If you instead took your income from the 1968 portfolio, you would run out of money by the 17th year. What caused the difference? The sequence of returns, which is out of your control.


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While Free College covers tuition and educational fees, there are other costs associated with education, like textbooks, uniforms and other tools of trade. Atlantic Cape’s financial aid team can help find scholarships to help cover these other costs to truly make education here as close to free as possible.

Atlantic Cape offers classes in Mays Landing, Atlantic City and Cape May Court House on weekdays and weekends; in the morning, afternoon and at night; in-person and online. Our flexible curriculum was

(continued from page 6)Free Collegedesigned for those juggling multiple demands from work and family. Our professors and academic advisors want to see students succeed and are available every step of the way on this new journey.

For more information, visit atlantic.edu/freecollege. If you have questions, Atlantic Cape’s expert admission officers are ready to help. Send us an email at [email protected] or call 609-343-5000 for Admissions or 609-343-5626 for Financial Aid.

Whether students entered the workforce immediately after high school or if, for whatever reason, college wasn’t a possibility at

the time, the CCOG is a grant that proclaims what I’ve discovered in my decades-long journey in education: that it is absolutely

never too late to earn a college degree.

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At Republic Bank, we have and always will prioritize local small business growth – and the needs of our customers, many of whom are small business owners. We deliver funding quickly and locally, which is one of the many reasons we’ve been ranked as one of the top small business lenders in the tri-state region for five years running. We pride ourselves on not just being a lender and financial partner, but a valuable resource and trusted advisor for our customers.

Local entrepreneurs often rely on the loans provided by banks in order to be successful and grow their businesses. For Haddonfield women’s clothing store Maxwell James and its owner Tammy Pular, a single woman running her own small business, the support she receives from Republic Bank is invaluable. By partnering with Republic, she has had access to a

(continued from page 2)The Future of Small Businesses...bank that can quickly meet her store’s financial needs and help drive its continued growth throughout. And for businesses just starting out, having the capital and guidance that a community-focused bank like Republic provides can be the difference between sinking or swimming. Courtney Dybalski, owner of Melange, a children’s boutique in Haddonfield, credits Republic Bank’s willingness to go the extra mile as a key factor in helping her venture get up and running in March 2018.

Although banks do play a critical role, it is up to all of us to ensure the future success of our favorite small businesses. We must all do our part in supporting them in order to boost our local economies and uplift our communities.

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While the October regulations provided clarity on specific time period for self-certification as a Qualified Opportunity Zone fund, for what constitutes a Qualified Opportunity Zone business and for what structures now qualify as Qualified Opportunity Zone Funds, investors need to be aware that certain rules regarding related parties and original use property still need to be clarified by Treasury in additional regulations.

In Southern New Jersey In Southern New Jersey, the program will likely drive investment from all types of developers and investors seeking to place their capital gains into projects, funds and seeking to place applicable businesses into Qualified Zones. Developers will seek to purchase land in order to build with their own capital and/or

(continued from page 13)SNJ and the Opportunity Zone...equity from Opportunity Zone investment vehicles in order to utilize cheaper sources of capital and drive development returns. Sectors such as multifamily, warehouse, self-storage, grocery anchor retail, and assisted living should see substantial interest from investors and developers.

Every county in South Jersey has at least two designated Opportunity Zones. Towns such as Pennsauken, Camden, and Lindenwold in Camden County; parts of Atlantic City, Pleasantville, the Atlantic City International Airport in Atlantic County; Deptford, Glassboro and Woodbury in Gloucester County; and a large swath of Vineland in Cumberland County include Opportunity Zones and will likely see interest for focused/targeted Opportunity Zone investment.


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Stewart, who made his first of many discoveries and published his first science paper as an undergraduate almost 40 years ago, said student and faculty research contributes to the major questions of science. “The big picture of science comes from a lot of little pictures,” said Stewart, who also funds an endowment for undergraduate student research at Rutgers–Camden. “One person and one project don’t answer a big question. The big questions are answered from a lot of work done by a lot of people done over a lot of time. All of that work pieces together a large picture and can answer a large question.”

Rutgers–Camden undergraduate students in biology, chemistry, computer science, math, and physics benefit from a wide range of support through Q-STEP, an on-campus mentoring program that began in 2009 as part of the National Science Foundation’s STEM Talent Expansion Program (STEP). “A major aim of the project is to create a community of scholars in the quantitative sciences,” said Joseph Martin, professor and associate dean for science, mathematics, technology, and health sciences. “The big picture is to try to increase the number of students who go into STEM fields and to grow the talent pool.”

Mario Rivera, who earned a bachelor’s degree in biology in May 2018, served as vice president of Q-STEP his senior year. He said when he started at Rutgers–Camden in 2016 as a transfer student from Camden County College, that Q-STEP was an enormous help. “I got to meet a lot of people with similar goals,” he said.

Rivera, a first-generation college student from Camden, benefitted from tutoring by senior students in the Q-STEP program. As a senior, he returned the favor by tutoring younger students studying in the sciences. He hopes to attend medical school and become a pediatrician. “I want to be able to help people—especially little kids,” Rivera said.

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Bioscience Research Thrives at Rutgers-Camden

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Technology OptionsOf course, the move to a more digital system will present new options that you can offer employees. These include:

Online Enrollment: This makes enrollment so easy, it’s surprising how many smaller employers still rely on paper enrollment forms. Go further by allowing online deferral changes, distribution processing, and beneficiary recordkeeping.

Retirement Readiness Score: A new feature available through many record-keepers, this is most accurate for employees when the website is tailored to each employee with their salary information, contribution rate, and company match.

Financial Planning Tools: Just because these tools are available doesn’t mean your employees know where to access and how to use them.

Outside Account Aggregation: Check to see if the record-keeper allows for outside account aggregation or the ability for employees to input information that will feed into the financial planning tools.

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Enhancing Employer Retirement Benefits in a Digital World

Managed Account Services: Think of this as one step beyond target date retirement funds or model portfolios. These are usually offered by a third party or through your record-keeper for an additional cost. Some offer a free version of this in addition to paid services.

Financial Wellness: Check what tools your record-keeper and financial professionals have for financial wellness. These could be literature, online videos, presentations, etc. Some record-keepers have integration to third party companies at a discounted rate. Third-party vendors can also be a source for more comprehensive programs.

By utilizing technology and properly communicating the functionality and importance you could see higher participation, higher deferral rates, and higher employee confidence in their personal finances. For best results, spend the time to truly understand your employees’ needs so you can tailor a cutting-edge retirement benefit that offers many types of employee touches coupled with individualized one-on-one support.

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Brent H. Sheppard, CRPS® RICP® AIF® is a financial advisor and partner at Cadence Financial Management, a firm that specializes in corporate retirement plan consulting. He has been ranked as a top retirement plan advisor in 2018 by the Financial Times.


Planning for SuccessYou have no control over living longer than planned, market volatility or interest rate fluctuations. Likewise, for premature death and chronic illness. You can, however, control your planning to eliminate or reduce the impact these events have on you and your family.

During your accumulation years consider small annual reallocations from fixed-income assets in favor of guaranteed financial backstops designed to offset the effects of the things you cannot control. I will save a discussion of the tools and techniques to accomplish this for another article.

When you retire, economists recommend that your minimum income need be fully guaranteed. This allows other investment assets to focus on discretionary needs and inflation.

Small changes to your planning can yield huge improvements in retirement income success, happiness and peace of mind.

Gary DeVicci is an owner of CPI Companies in Voorhees. He has helped many people throughout the Delaware Valley plan for their future. Contact Gary at [email protected] or by calling 856-874-1250.

(continued from page 15)Reducing Risk in Retirement Income Planning

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Documents

South Jersey OPPORTUNITY ZONEProgram · Few people understand the impact that stock market volatility can have on their retirement plans. Statistically, your retirement plan is more