The document summarizes key information about New Jersey's Grow NJ tax credits and Economic Redevelopment and Growth Grants, including: 1) The programs have detailed legal requirements and regulations, and the NJ Economic Development Authority makes determinations on applications. 2) Location is very important - the largest incentives are available for projects in specific distressed areas like Camden, Newark, and Trenton or in "Garden State Growth Zones". 3) Incentives are higher for projects that will create more jobs or undertake redevelopment in targeted locations.

1. New Jersey Future Redevelopment Forum
March 14, 2014
GROW NJ TAX CREDITS
and
ECONOMIC REDEVELOPMENT
& GROWTH GRANTS
Anne S. Babineau, Esq.
Wilentz, Goldman & Spitzer, P.A.
90 Woodbridge Center Drive
Woodbridge, New Jersey 07095

2. Detailed Legal Requirements
• Economic Opportunity Act of 2013 (PL 2013, c.
161)
• Further Amendment Expected (EO 2014 Parts 1,
2, etc)
• Proposed EDA Regulations published Jan. 2014
• NJ EDA – Determinations regarding Applications
– see NJEDA website

3. 1. Public Interest – Does project need help, and
can you prove you will provide a net benefit?
2. Prevailing Wage
3. Does project generate Jobs, or generate
specific types of taxes
4. Transfer of Tax Credits may be necessary.
5. If Residential, stay tuned for legislative
amendments
Key Preliminary Questions

4. 1. Public Interest
Grow NJ:
• EDA approval will only be granted if the
credits are a “material factor” in the
decision making of the user (tenant or
owner)
• EDA determines there is a net positive
benefit to the State equaling at least 110%
of the requested tax credits

5. 1. Public Interest
ERG:
• One needs to be able to prove that there
is a project financing gap
• In non-residential projects, one must
provide evidence that there will be a net
benefit to the State or Local entity that is
assisting the project

6. 2. Prevailing Wage
Grow NJ and ERG:
One must consider whether the costs of
compliance with the prevailing wage
requirements outweigh the value of the
incentive program to the applicant

7. 3. Jobs (Grow) or Generate Specific
Taxes (ERG)
Grow NJ:
You may find it hard to make the
application worthwhile unless you are
generating or retaining a substantial
number of jobs

8. 3. Jobs (Grow) or Generate Specific
Taxes (ERG)
ERG:
• Is your project going to generate
specific types of taxes that you may be
able to have pledged to help to make
your project possible?
• (ERG is a form of “Tax Increment
Financing”)

9. 4. Tax Credits issued under Grow
or ERG
Grow NJ and ERG:
• Transfer of Tax Credits may well be
necessary
• For Grow NJ and for the residential tax
credits authorized under ERG, businesses
who are not able to use the tax credits
themselves must learn the process of
transferring credits, and become familiar
with the market of transferees

10. 5. If your project is residential, stay
tuned
ERG Tax Credits:
• EO 2013 requires that the applicant must
complete project and submit TCO no later
than July 28, 2015
• Legislative Amendments are anticipated to
move that date to 2018
• (Grow NJ is a program to attract Jobs;
Residential –limited typically)

11. Location, Location, Location
• A statute that will help implement State
Plan
• A statute that will help redevelopment

12. Location, Location, Location/Grow
While the amount of the tax credits under Grow
NJ does increase if the nature of the jobs attract
certain kinds of development (transit oriented) or
certain types of jobs (for example, technology or
manufacturing), the most significant credits
are available in specific places where it is
often challenging to develop or redevelop

13. Location, Location, Location/Grow
For example, if you are willing to bring 250 jobs to,
and invest $50 Million in, “a mega project” in an
“urban transit hub” you could be entitled to:
• Base amount of tax credits of $5000 per job for
up to 10 years
• Moreover, cap on project is highest in these
areas – up to $350M for project in Camden

14. Location, Location, Location/Grow
“urban transit hub” =
• Camden
• East Orange
• Elizabeth
• Hoboken
• Jersey City
• Newark
• New Brunswick
• Paterson
• Trenton

15. Location, Location, Location/Grow
Bring jobs to a “Garden State Growth
Zone” municipality
• Base amount of tax credits of $5,000/job
for up to 10 years
• Absolute cap on project in GSGZ = $300M

16. Location, Location, Location/Grow
“Garden State Growth Zone” =
• Paterson
• Passaic
• Trenton
• Camden

17. Location, Location, Location/Grow
Bring jobs to a project in an “urban transit
hub municipality”:
• Base amount of tax credits of $5,000/job for up
to 10 years
• Absolute cap on project in urban transit hub
municipality = $100M

18. Location, Location, Location/Grow
“urban transit hub municipality” =
• Camden
• East Orange
• Elizabeth
• Hoboken
• Jersey City
• Newark
• New Brunswick
• Paterson
• Trenton
• Bridgeton
• Mount Holly
• Salem
• West New York

19. Location, Location, Location/Grow
Bring jobs to a project in a “distressed
municipality”:
• Base amount of tax credits of $4,000/job for up
to 10 years
• Absolute cap on project in distressed
municipality = $80M

20. Location, Location, Location/Grow
“distressed municipality” = See list on
EDA website
• Municipalities such as:
–Neptune
–Orange
–Phillipsburg

21. Location, Location, Location/Grow
Bring jobs to a project in a location that is
“a deep poverty pocket”:
• you would be entitled to bonus tax credits
of $1,500 per job

22. Location, Location, Location/Grow
By comparison, the base amount of credits
in other areas that are “eligible,” but
perhaps not viewed as much in need of
assistance:
• Base amount of tax credit is $500 per job
• Absolute Cap = $25M
• Amount of credits could be further limited to 90% of the
withholding taxes generated by the business at that
location

23. Location, Location, Location/ERG
If you are willing to undertake a
“redevelopment project”:
• not only “projects located in areas determined to be in
need of redevelopment”
• also could be “any work or undertaking in accordance
with Redevelopment Area Bond Financing Law”
• also could be “any work or undertaking “pursuant to a
redevelopment plan adopted by a State Entity” such as
NJ HMDC, NJ Sports & Expos Auth, Fort Mon Econ
Revitaliz Auth
you can seek to recapture certain taxes to
be generated by the project

24. Location, Location, Location/ERG
The percentage of total project costs that
can be funded with incremental taxes,
providing assistance to make a tough
project feasible, is greater in the locations
where the Legislature seeks to attract
development (for example, in Garden
State Grow Zone municipalities)

25. Location, Location, Location/ERG
As for residential ERG projects,
most of the $600 Million of tax
credits authorized for such
projects is earmarked for specific
locations.

26. Location, Location, Location/ERG
(a) $250,000,000 shall be restricted to qualified
residential projects within following counties
• Atlantic
• Burlington
• Camden
• Cape May
• Cumberland
• Gloucester
• Ocean
• Salem

27. Location, Location, Location/ERG
(b) $250,000,000 shall be restricted to
qualified residential projects located in:
–(i) urban transit hubs that are
commuter rail in nature,
–(ii) a Garden State Growth Zone not
located in a county mentioned in
subparagraph (a) of this paragraph,
–(iii) disaster recovery projects….

28. Location, Location, Location/ERG
–(iv) Municipality in which a Schools
Development Authority district is located
in Hudson County that were awarded
State Aid in State Fiscal Year 2013
through the Transitional Aid to Localities
program

29. Location, Location, Location/ERG
(c) $75,000,000 shall be restricted to
qualified residential projects in
–(i) distressed municipalities
–(ii) deep poverty pockets
–(iii) highlands development credit
receiving areas or redevelopment areas

30. Location, Location, Location/ERG
(d) $25,000,000 shall be restricted to
qualified residential projects that are
located within a qualifying economic
redevelopment and growth grant
incentive area