Month: October 2024

The New Jersey Economic Development Authority (“NJEDA”) held its monthly Board meeting on October 9th, 2024 in Trenton, New Jersey. Among other items, the Board approved the creation of the Garden State Commercial Property Assessed Clean Energy (“C-PACE”) Program, a new program that facilitates private financing for certain clean energy improvements to qualifying properties.

Additionally, the Board approved new rules concerning the NJEDA’s prevailing wage requirements. These changes do not diminish the current regulations, but provide additional clarity on key definitions.

On October 25th, the NJEDA extended the deadline for applications under their Historic Property Reinvestment Program “(HPRP)” until December 5th, 2024. The HPRP is a $50M competitive annual tax credit program supporting rehabilitation of historic properties in New Jersey.

Revisions to the Brownfield Redevelopment Incentive Program (“BRIP”) were signed into law on September 4th, 2024, and the NJEDA will reopen applications after the new rules are issued. Both the Brownfield and Historic programs can be paired with the NJEDA’s Aspire program.

The application for the NJEDA’s Emerging Developer Grant Program remain open until Friday, November 15th. This program provides grants of up to $250,000 for eligible predevelopment softs costs for qualifying developers.

Garden State Commercial Property Assessed Clean Energy (“C-PACE”) Program

This newly approved program will provide financing opportunities for certain improvements to eligible commercial, industrial, agricultural and multi-family (5 or more dwelling units) properties in participating municipalities. Owners will be able to access financing for these improvements, which will be serviced through the payment of an additional assessment on their property.

C-PACE can cover up to 100% of eligible improvements, which must fall under one of the identified Eligible Improvement Categories:

• Energy Efficiency Improvements
• Water Conservation Improvements
• Renewable Energy System Improvements
• Energy Storage
• Electric Vehicle Charging Infrastructure
• Stormwater Management Systems
• Flood Resistant Construction Improvements
• Hurricane Resistant Construction Improvements
• Microgrid

The application for the C-PACE program has not yet opened.

Historic Property Reinvestment Program

The HPRP is a competitive $50,000,000 annual gap financing tax credit that supports the development of eligible historic properties in qualifying locations in New Jersey. It can be combined with the Federal Historic Tax Credit and covers between 45-60% of eligible costs (not to exceed between $4M-$12M).

The program has approved over $50,000,000 in tax credits for two projects, including the Loews Theater in Jersey City and the Schwehm Building in Atlantic City. The application deadline for the HPRP has been extended to December 5th, 2024. As of the last approval, $155,660,456.59 in program funding remained available.

Brownfield Redevelopment Incentive Program

The Brownfield Redevelopment Incentive Program is a $50M tax credit program that provides funding for environmental-related costs associated with the redevelopment of commercial, retail, and mixed-use projects. The program provides between 60-80% of eligible costs (not to exceed $8M-$12M) on qualifying projects.

To date, the NJEDA has approved one project under the BRIP. On May 8th, 2024, the Board approved a tax credit not to exceed $350,186.50 for the investigation and remediation of a former manufacturing site in Elmwood Park, NJ. As of this approval, $149,649,813 remained in available program funding.

Emerging Developers Grant Program

The Emerging Developer Grant Program is a $20M PILOT program from the NJEDA that provides grant awards of up to $250,000 to support small-scale developers with their predevelopment soft costs.

Approved developers would receive up to 50% of qualifying expenditures in the form of reimbursements of eligible costs including, legal fees, market/feasibility studies, environmental investigations, among others. Developers must have completed no less than two projects, but no more than 5, and only one award can be provided per development entity.

Applications will remain open until Friday, November 15th at 5PM.

For more information, please contact:

Brendan Pytka
Director of Tax Credits & Incentives
Phone: (862) 418-3702
Email: bpytka@murphyllp.com

Chris J. Murphy, Partner
Chair, Tax Credits & Incentives
Phone: (973) 705-7421
Email: cmurphy@murphyllp.com

New Jersey Releases 4th Round Affordable Housing Obligations

The NJDCA has identified the need for over 150,000 rehabilitated and new affordable housing units over the next 10 years.

Following the passage of legislation earlier this year, which abolished the Council on Affordable Housing (COAH) and codified the methodology for calculating affordable housing obligations throughout New Jersey, the Department of Community Affairs (DCA) released its current and prospective “Fourth Round” obligations for 2025 – 2035. The DCA found that there is a total need for over 150,000 rehabilitated and new affordable housing units over the next ten years. In allocating obligations, the DCA used multiple factors, including non-residential valuation and income capacity. Municipalities have until January 31, 2025 to accept the proposed numbers (through the adoption of a binding resolution) or provide their own. Any challenge to the municipality’s determination must be filed by February 28, 2025. Regardless of any challenge, all ordinances to effectuate the allocation, through the ratification of a Housing Element and Fair Share Plan, must be adopted by June 30, 2025. Property owners and other interested parties that would like to have their property or project included have until August 31, 2025 to file a challenge (assuming the property is not already included in the Housing Element and Fair Share Plan). Lastly, by March 15, 2026, all municipalities must have adopted ordinances and resolution implementing a Housing Element and Fair Share Plan. Missing this deadline will result in a municipality forgoing immunity from affordable housing litigation.

While these numbers represent the need allocated to each municipality, a wide array of adjustments for factors such as vacant land and bonus credits for certain types of affordable housing remain available to municipalities. In some instances, municipalities may use these adjustments and bonus credits to see an actual number of units built as low as a quarter of the numbers released by the DCA. Developers should review whether any proposed projects could take advantage of these bonus credits to make their projects more palatable to municipalities. Developers must also consider certain environmental and related constraints on a property. Even if a municipality and developer agree a project is suitable for a proposed affordable housing project, these constraints can make a project unfeasible.

The release of the “Fourth Round” obligations will present opportunities for developers offering creative solutions to obtain entitlements for projects that previously would not have been possible. In presenting municipalities with solutions to help satisfy outstanding obligations, proactive developers can take advantage of being the first to the table.

The attorneys at Murphy Schiller & Wilkes LLP (MSW) focus on solution-based strategies. While litigation is always on the table, we believe that presenting municipalities with opportunities to problem solve will ultimately lead to better outcomes. If you are look for solutions for your property or project, please feel free to reach out to us directly. We would be happy to assist.

Chris J. Murphy, Partner
Land Use, Zoning and Redevelopment
Phone: (973) 705-7421
Email: cmurphy@murphyllp.com

Matthew E. Gilson, Partner
Phone: (973) 241-3478
Email: mgilson@murphyllp.com

The third quarter of 2024 ended strong for the attorneys at Murphy Schiller & Wilkes LLP (MSW). The firm acted as lead counsel in connection with the acquisition and sale of properties in all asset classes, helped our clients negotiate large lease transactions, and represented both lenders and borrowers in connection with financing CRE deals, both locally and nationally. In addition, the firm’s Land Use, Zoning and Redevelopment team helped clients secure noteworthy approvals for major industrial, multi-family, and cannabis-related projects throughout New Jersey.

In Q3 2024, the firm represented the following:
 

• Developer in connection with $30,000,000 acquisition and construction loan for industrial project in New Castle County, Delaware.
• New Jersey bank in connection with a $30,000,000 revolving credit facility and a $10,000,000 equipment loan facility for a New Jersey based company.
• Borrower in connection with a $26,500,000 life insurance company refinance of a multifamily property in Essex County, New Jersey.
• Developer in connection with $10,000,000 construction loan for multifamily development in Hoboken, New Jersey.
• Owner in connection with $10,000,000 refinance of hotel property in Wichita, Kansas.
• Lender/Seller in connection with $8,700,000 sale of 82-unit multifamily complex in Camden County, New Jersey.
• Lender in connection with a $7,000,000 construction loan assumption and modification in Passaic County, New Jersey.
• Seller in connection with a $6,500,000 sale, seller finance and environmental remediation of industrial property in North Jersey.
• Landlord in connection with 120,000 square foot industrial lease in Secaucus, New Jersey.
• Tenant in connection with a 75,000 square foot lease for industrial property in Union County, New Jersey.
• Developer in connection with land use approvals for the development of a new Zero-Emission Vehicle Fueling Facility in Newark, New Jersey.
• Developer in connection with land use approvals for a new recreational cannabis cultivation facility in Hackensack, New Jersey.
• Developer in connection with land use approvals for a new recreational cannabis dispensary in River Edge, New Jersey.
• Developer in connection with land use approvals for four 4-unit low-rise multifamily buildings in Newark, New Jersey.