On Thursday, April 13, 2017, the New Jersey Economic Development Authority (NJEDA) will hold its monthly board meeting in Trenton. Among the actions to be taken, the Board will consider applications under the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment and Growth (ERG) Program. The Board will also consider the issuance of bonds, loans, and guarantees for multiple applicants.
Grow New Jersey Assistance Program
The Board will consider three applications under the Grow NJ Program, totaling over $25,000,000 in tax credits. If approved, the three projects will bring jobs and capital investment to Paterson, Camden, and Piscataway Township.
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 location. 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, 228 projects have received awards, totaling over $4.3 billion in tax credits. Once certified, the 228 projects will drive over $3.8 billion in private capital investment, create over 28,000 new jobs, and retain over 27,000 jobs at risk of leaving the State.
Economic Redevelopment and Growth (ERG) Program
The Board will also consider one application under the ERG Program. The development project, located in Atlantic City, is seeking a total of $38,400,000.
Under the ERG Program, the NJEDA and the State Treasurer “may enter into a redevelopment incentive grant agreement with a developer” for any “qualifying redevelopment project located in an economic redevelopment and growth grant incentive area.” N.J.A.C. 19:31-4.1(a).
If a project is located in a Garden State Growth Zone (GSGZ), which includes Atlantic City, the applicant can receive “up to an average of 85 percent of the project annual incremental revenues” that are “directly realized from businesses operating on the redevelopment project premises.” Id. These revenues are then “paid to the developer in the form of a grant derived from the realized revenues.” Id.
With limited exceptions, for projects located in GSGZs, the base amount of the combined reimbursements from State and local grants or tax credits cannot exceed 30 percent of the eligible cost of the project. Importantly, a “developer seeking an incentive grant is required to make an equity participation for at least 20 percent of the project’s eligible costs.” Id.
The ERG Program has also been incredibly successful. Under the commercial component of the program, the NJEDA has awarded grants to 11 applicants, totaling $305,508,906. The program has helped drive over $1.5 billion in private capital investment, and has led to thousands of construction jobs throughout the State.
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