United States: New Business Incentives Offered by the NJ Economic Opportunity Act of 2013

Last Updated: September 25 2013
Article by Craig M. Gianetti

After several months of negotiation among politicians and a conditional veto by the governor of an earlier version of the legislation, the New Jersey Economic Opportunity Act of 2013 (the "Act") was signed into law on September 18, 2013. The comprehensive Act is an aggressive push by the state to promote job creation and the redevelopment of urban centers, suburban office parks and areas impacted by Hurricane Sandy by expanding the various state programs that offer tax incentives.

The Act proposes to merge five economic development incentive programs, including the Business Employment Incentive Program and Urban Transit Hub Tax Credit Program, into two existing programs: the Grow New Jersey Assistance ("Grow NJ") Program and the Economic Redevelopment and Growth ("ERG") Program, which are administered by the New Jersey Economic Development Authority (the "Authority"). The Authority reviews the various applications for these incentives to ensure that the projects meet certain eligibility requirements and awards these incentives, as appropriate.

The Act lowers certain threshold requirements in order for projects to qualify for tax incentives so as to cast a broader net for the types of businesses and projects that can receive these incentives. One key change to the Act as it went through the legislative process was the removal of the requirement that prevailing wage be used during construction. This requirement was seen by many as an impediment to the financial viability of certain projects.

Job Creation/Retention

The Act expands Grow NJ Program, which is focused on attracting and retaining companies in New Jersey. The Act offers broader incentives and tax credits for businesses that invest and create jobs in New Jersey. A qualified project must meet minimum capital investment and jobs-created or jobs-retained thresholds in order to be eligible for the tax credit. These thresholds are reduced for businesses located in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties and for businesses located in a newly created Garden State Growth Zone, which encompasses the four cities with the lowest median family income.

The base tax credit ranges from $500 to $5,000 per job, per year; however, additional tax credits are awarded for particular project types and project locations that can increase the total tax credit to as much as $15,000 per job, per year. The amount of the tax credit is tied to the project type, the number of jobs created or retained by the project, the location of the project, and other standards. The tax credit is awarded for a period of 10 years.

Redevelopment

The Act also expands the ERG Program, which will be the sole redevelopment incentive program for the state. The Act builds on the existing ERG Program to close project financing gaps and incentivize redevelopment.

In the case of residential redevelopment, the ERG Program provides incentives and tax credits for qualified residential projects, which must have a minimum total project cost ranging between $5 million and $17.5 million, depending on the location of the project. For residential projects that have already applied for the Urban Transit Hub Tax Credit, a qualified residential project can receive a tax credit of up to 35 percent of its capital investment or up to 40 percent of its capital investment in projects in a Garden State Growth Zone. However, the Urban Transit Hub Tax Credit program will be phased out by the end of this year and replaced with the ERG Program.

Under the ERG Program, the developer can apply for a state or local incentive agreement to receive back from the state or local authority up to an average of 75 percent of the annual incremental state or local revenues from the redevelopment project generated through various taxes or 85 percent of such revenues for projects in a Garden State Growth Zone. In the case of a qualified residential project where the state revenues from the project are inadequate to fully fund the grant, the Authority can convert the grant award into tax credits equal to the full amount of the incentive grant.

The redevelopment incentive grant under the ERG Program shall not exceed 30 percent of the total project costs unless the development is in a Garden State Growth Zone, where the cap is increased to 40 percent of the total project costs. The maximum amount of tax credits that may be awarded for all qualified residential projects is $600 million, which is further broken out into various caps based on certain areas of the state.

For both the Grow NJ and the ERG Programs, the definition of a "qualified incentive area" is broad in some instances and limited in others. The definition includes, but is not limited to, Planning Areas 1 through 3, urban transit hubs, smart growth areas, Fort Monmouth and limited sections of Planning Areas 4A through 5 (which are considered the more environmentally sensitive areas).

The deadline to apply to the Authority for incentives under Grow NJ or the ERG Programs is July 1, 2019.

Use of the Tax Credit

The tax credit is an incentive that allows corporations to apply the tax credit dollar for dollar against certain tax liabilities or that can be used as a gap-financing tool for development, whereby a developer assigns the tax credit to a financial institution over the life of the tax credit (typically 10 years) in exchange for up-front capital. In the case of the ERG Program, the up-front capital cannot be less than 75 percent of the value of the total tax credit.

Numerous federal and state tax credit programs currently offer incentives for various forms of development aside from the ERG and Grow NJ Programs, including the federal New Markets Tax Credit, Low-Income Housing Tax Credit, Historic Tax Credit and Solar Investment Tax Credit. Though the fundamentals on how the tax credits can create capital are similar with these programs, each has varying requirements and deal structures.

As noted at the outset, the Act is very comprehensive. This update is meant only to summarize certain aspects and is not exhaustive of all facets of the Act. Please continue to follow the Day Pitney website for information on an upcoming seminar discussing New Jersey Economic Opportunity Act and other tax credit programs. If you have any questions, please contact any of our attorneys listed here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions