Month: August 2017

On August 7, 2017, Governor Chris Christie signed legislation to amend the Grow New Jersey Assistance Program (“Grow NJ”). The amendment (ACS for A-4432/SCS for S-2841), which passed both the Senate and the Assembly with broad bipartisan support, is meant to encourage businesses to enter into collaborative research relationships with New Jersey colleges and universities.

Now, businesses may qualify for a base tax credit amount of $5,000 per job, per year, if the business locates a qualified business facility (“QBF”) in a Garden State Create Zone, and the facility is used by the business in a targeted industry (including, transportation, manufacturing, defense, energy, logistics, life sciences, technology, health, and finance) to conduct a collaborative research relationship with that university.

A Garden State Create Zone is defined as the campus of a doctoral university, and the area within a three-mile radius of the outermost boundary of the campus of a doctoral university. The State currently has 8 doctoral universities, including Montclair State University, NJIT, Princeton University, Rowan University, Rutgers University-New Brunswick, Rutgers University-Newark, Seton Hall University, and Stevens Institute of Technology.

In addition, the legislation establishes a new bonus of $1,000 per job, per year, if a business (1) is in a targeted industry and locates in a QBF on, or within three miles of, the campus of a college or university other than a doctoral university, and (2) the facility is used by the business to conduct a collaborative research relationship with the college or university. The State currently has 40 non-doctoral colleges and universities (including community colleges) that qualify under this bonus category.

The legislation requires the New Jersey Economic Development Authority (“NJEDA”), in consultation with the Secretary of Higher Education, to establish standards for collaborative research relationships between businesses in targeted industries and colleges and universities necessary for a business to qualify.

Created under the Economic Opportunity Act of 2013, Grow NJ is the State’s main job creation and business retention incentive program. The purpose of the program is to encourage economic development and job creation and to preserve jobs that currently exist in New Jersey but which are in danger of being relocated outside of the State.

These recent changes to the Grow NJ program could signal a shift towards incentives aimed at encouraging job growth in industries focused on innovation. In an election year in New Jersey, the State’s economic incentive programs have been put under a microscope. While both candidates for governor believe that incentives have a role to play in the State’s overall economic development strategy, it is hard to tell exactly how and when the current programs will change. These recent amendments, passed with broad bipartisan support, could be a sign that the next round of incentives will be focused on the “innovation economy.” Putting the State’s resources into higher paying, skill-based jobs, could be the future.

On Tuesday, August 8, 2017, the New Jersey Economic Development Authority (NJEDA) held its monthly board meeting in Trenton. Among the actions taken, the Board considered applications under the Grow New Jersey Assistance Program (Grow NJ). The Board also considered the issuance of bonds, loans, and guarantees for multiple applicants.

Grow New Jersey Assistance Program

The Board approved seven applications under the Grow NJ program, totaling over $79,000,000 in tax credits. Once certified, the seven projects will create or retain full-time jobs in Pennsauken, Cranbury, Lawrenceville, Lakewood, Paterson, Vineland, and Bridgewater.

Created under the Economic Opportunity Act of 2013, Grow NJ is the State’s main job creation and business retention incentive program. The purpose of the program is to “encourage economic development and job creation and to preserve jobs that currently exist in New Jersey but which are in danger of being relocated outside of the State.” N.J.S.A. 34:1B-244(a).

Determination of the size of an award is based on the project’s location, the corresponding capital investment, and the jobs created or retained at a qualified business facility. Applicants must demonstrate that the project will yield a net positive benefit to the State and must indicate that the award of tax credits under the program is a material factor in the business decision to make a capital investment and locate in the State. N.J.S.A. 34:1B-244(b)(3).

The Grow NJ Program has been wildly popular and incredibly successful. Since its implementation, 229 projects have received awards, totaling over $4.4 billion in tax credits. Once certified, the 229 projects will drive over $3.9 billion in private capital investment, create over 28,000 new jobs, and retain over 30,000 jobs at risk of leaving the State.