United States: Changes to Economic Opportunity Act Seek To Stimulate Development in South Jersey

Everyone knows that Atlantic City, N.J., is in dire straits, and this year has been particularly tough for the city. Four casinos closed in 2014 and a fifth may soon follow. These closures have put more than 8,000 casino employees out of work and the effects of these closures can be felt throughout South Jersey.

Although there is no one-size-fits-all solution, one thing is clear: Atlantic City and much of South Jersey have for too long relied on an economy primarily based on gaming, hospitality and tourism. To reverse the region's downward trend, we must diversify the region's economy and encourage private-sector job growth. To that end, New Jersey's leaders have taken a giant step toward increasing economic development in Atlantic City and South Jersey by reclassifying Atlantic City as a "Garden State Growth Zone" and by easing the criteria for projects to be considered "Mega Projects" in the eight South Jersey counties.

To understand the significance of these new changes, and their anticipated effect on Atlantic City, a brief overview of the Economic Opportunity Act of 2013 and its incentive programs is required. The act was first signed into law by New Jersey Gov. Chris Christie on Sept. 18, 2013. The act was created to maximize economic development and private-sector job growth. The act, which is administered by the New Jersey Economic Development Authority (EDA), consolidated five existing economic incentive programs into two: the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment Growth Program (ERG).

In an effort to build on the act, and to correct a legislative oversight, the Economic Opportunity Act of 2014, Part 3 (Part 3) (A-3213) passed in both the Assembly and Senate in June. Since Part 3 reached the governor's desk, however, the magnitude of problems facing Atlantic City has become even clearer with the announcement of several casino closures. Gov. Christie, therefore, conditionally vetoed Part 3 on Sept. 11. Pursuant to his constitutional authority, the governor returned Part 3 to the legislature with additional changes in an effort to encourage nongaming economic development and job growth in Atlantic City. Shortly thereafter, Part 3 passed by large margins in both the Assembly and the Senate, and was signed into law by Gov. Christie on Oct. 24.

Part 3 provides very appealing incentives for businesses to move their operations to Atlantic City and the eight South Jersey counties. Although the Economic Opportunity Act originally contained additional incentives and lower jobs and capital investment requirements for South Jersey projects, the new changes in Part 3 have greatly increased the incentives for nongaming activities in Atlantic City and South Jersey. The changes in Part 3 related to the Grow NJ program are the focus of this article.

Grow NJ awards tax credits to businesses (other than point-of-sale retail businesses) that create or retain jobs in New Jersey and make a qualified capital investment at an appropriate business facility. Once the threshold requirements are met, a business may be eligible for tax credits that are applicable to the business' New Jersey state corporate income tax liability, insurance company tax and franchise tax. These tax credits can be used for up to 10 years from the date that the business certifies compliance with the Grow NJ requirements. Grow NJ also permits the business to monetize the tax credits by applying for a benefit transfer certificate. The transfer certificates can be sold to another entity that has specific corporate tax liabilities to New Jersey. The EDA takes a relatively "hands-off" approach and simply requires that the tax credits be transferred for consideration not less than 75 percent of the transferred tax credit value. Although the values of tax credits fluctuate like any other traded commodity, the current market rate for tax credits is around 90 percent. Even if a business decides to sell its tax credits, the transferor must remain in compliance with the Grow NJ requirements.

Grow NJ has four eligibility requirements:

  • The project is located in a "qualified incentive area";
  • The project meets or exceeds the applicable employment and capital investment requirements;
  • The tax credits are a "material factor" in the applicant's decision; and
  • The capital investment and resultant creation of full-time jobs will yield a net positive benefit of at least 110 percent to the state.

In addition to the eligibility requirements, Grow NJ also has performance-based requirements that include:

  • Maintaining the project employment for 1.5 times the period in which the business received the tax credit (generally, 10 years);
  • Maintaining a minimum of 80 percent of the full-time workforce from the last tax period prior to the grant approval, which is evidenced through annual reporting requirements; and,
  • Submitting a certification from an independent certified public accountant regarding the actual capital investment and job creation/retention at the completion of the project.

The "base" tax credit amounts range from $500 to $5,000 per job per year depending on the location and type of project. For example, eligible projects located in a Garden State Growth Zone (GSGZ) or projects that qualify as a "Mega Project," receive the statutory maximum amount of $5,000 per year for each new full-time job. These credits are also supplemented by "bonus" credits that are based on other characteristics. Let's say that a business wants to open up a factory to manufacture widgets in Trenton. The project is expected to create 100 new full-time jobs. Assuming that the project meets the minimum capital investment requirements ($20 per square foot of gross leasable area for industrial projects), because Trenton is in a GSGZ, the project would receive $5,000 for each of the 100 jobs for 10 years, which equates to a total award of $5,000,000. Based on the amount of capital investment, the average salaries of the employees, the project's industry or a host of other factors, the project could also qualify for bonus credits of more than $5,000 per job per year for 10 years. In other words, this business could receive more than $10 million in tax credits, which it could apply toward its tax liability or monetize into nondilutive capital.

The recently passed modifications in Part 3 make two material changes to the Grow NJ program that were targeted at stimulating economic development in Atlantic City and the eight South Jersey counties. The first change expanded the definition of a GSGZ. Under the old legislation, the four cities with the lowest median family income based on the 2009 American Community Survey from the U.S. Census: Camden, Trenton, Paterson and Passaic. Projects in these municipalities have significantly lower eligibility thresholds and higher incentive levels. Part 3 has expanded the GSGZ definition to include Atlantic City. This means that qualifying projects in Atlantic City will now have less stringent eligibility requirements and receive the maximum amount of base and bonus tax credits for each new or retained full-time job. Atlantic City's new designation as a GSGZ will make it easier for businesses to obtain larger awards if they pursue a project in Atlantic City.

The second change expanded the definition of a "Mega Project." Under the old legislation, a Mega Project was defined as: (1) a qualified business facility in the logistics, manufacturing, energy, defense or maritime industries in a port district, or businesses in the aviation industry in an aviation district with either a $20 million or more capital investment and 250 new or retained jobs, or 1,000 jobs created; or (2) a qualified business facility located in an urban transit hub with a capital investment of $50 million and 250 jobs created or retained. Part 3 has expanded the Mega Project definition by significantly relaxing the eligibility requirements for projects in South Jersey. Under the new changes in Part 3, Mega Projects now include projects that are located in an existing area designated in need of redevelopment with the eight South Jersey counties—Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean or Salem—and having a capital investment in excess of $20 million and at which more than 150 full-time jobs are created or retained. These new eligibility requirements will make it significantly easier for businesses interested in South Jersey to obtain large awards under the Grow NJ program.

An example will demonstrate the significance of this change. Assume that a manufacturing business wishes to acquire a 10,000 square-foot rundown industrial building in one of the eight South Jersey counties. The project is anticipated to create 200 full-time jobs and the business will make a $25 million capital investment in the property. Under the old legislation, this project would not qualify as a Mega Project. Assuming that the qualified incentive area is a "Priority Area," the project would receive a base credit award of $500 per job per year over 10 years, plus an additional $1,000 per job per year in bonus credits. This project would therefore be eligible for a total award of $3 million ($1,500 per job x 200 jobs x 10 years).

Under the new changes to Part 3, however, this project would qualify as a Mega Project, as it exceeds the 150 jobs and $20 million capital investment requirements. This means that the project would receive $5,000 in base credits and be eligible for an increased bonus award that could be in excess of $5,000. Assuming that the project receives $5,000 per job per year in bonus credits as a Mega Project, the total award for the project would be $20 million ($10,000 per job x 200 jobs x 10 years). As a direct result of the new changes to Part 3, this project would therefore receive an additional $17 million in tax credits that the business could use against its own tax liability or sell them to raise nondilutive capital.

These new changes to the Grow NJ program make Atlantic City and its surrounding counties a much more appealing place to do business. Prospective applicants must act quickly to take advantage of the new changes to the Grow NJ program.

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.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.