Government Affairs

Incentive Alert: New Rules Under the Grow NJ Program Encourage Collaborative Research Relationships Between Industry and Academia

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The New Jersey Economic Development Authority (“NJEDA”) has established new standards under the Grow New Jersey Assistance Program (“Grow NJ”) for businesses seeking to enter into collaborative relationships with colleges and universities in the State of New Jersey.

The new rules were drafted pursuant to a recently passed amendment to the Grow NJ program (ACS for A-4432/SCS for S-2841), with the hopes of encouraging businesses to enter into such collaborative research relationships.

Under the new rules, 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 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 new rules establish a 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 NJEDA will evaluate prospective research partnerships based on the ability to meet one of four categories:

  • Direct university collaboration or joint initiative or participation wherein the college or university partners with the business, and may include other business in a similar field of science, to advance an area of science;

  • Sponsored research wherein the eligible business directly funds a college or university and pays for research to solve a specific problem;

  • Grants or fellowships wherein funding is provided directly by a business to a professor or graduate student to advance a specific area of science;

  • Corporate sponsored awards for entrepreneurship wherein a business sponsors an award to be given to a student-developed technology startup or innovation

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.

The Grow NJ program has been wildly popular and incredibly successful. Since its implementation, 232 projects have received awards, totaling over $4.4 billion in tax credits. Approved applicants generally have three years to certify, or complete, a project. A project is deemed complete when the applicant has hired or retained the number of employees listed in its application, and satisfied the program’s capital investment requirements. Once certified, the 232 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.

If interested in learning more about Grow NJ or other economic development incentive programs, please do not hesitate to contact Murphy Partners LLP at (973) 723-7036 or info@murphyllp.com.

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in real estate and economic incentive advisory. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal services to meet the distinctive needs of our clients. Through the development of comprehensive legal strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

The Importance of a Proactive Government Affairs Strategy in Light of a Changing Administration

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As the smoke clears after a long battle, New Jersey will have a new governor on January 16, 2018. Yesterday, Phil Murphy defeated Lt. Governor Kim Guadagno in a race to succeed Governor Chris Christie as New Jersey’s 56th governor. Winning the race by 13 percentage points, Murphy will take office with large majorities in both the senate and the assembly. Having campaigned on a progressive platform, the new administration is likely to work quickly with members in the legislature to implement its agenda.  

The next few months will be filled with the excitement of the transition: the Governor-elect putting together a transition team, selecting key positions within the front office, and working to identify individuals to fill the 15 cabinet-level or principal departments in the state’s executive branch.

Having spent years in Trenton as part of two executive branch agencies, I can tell you from firsthand experience that the importance of a proactive government affairs strategy is often overlooked. Too many times, I sat in meetings with organizations or businesses who were fighting from behind. Had they simply paid attention while the legislature passed a law, or an executive branch agency promulgated a rule, that materially impacted their business, they may have been able to influence the process. Whether because of a lack of knowledge, or a limited understanding of the process, they would find themselves in a compromised position.

While everyone likes certainty, smart organizations and businesses find opportunity in change. New leadership leads to new policy. Whether the issue is clean energy, the legalization of marijuana, or the raising of the state’s minimum wage, it is important to have a say in the conversation.   

Chris J. Murphy is a partner in the governmental affairs group at Murphy Partners LLP, a boutique law firm located in Newark, New Jersey. He can be reached at (973) 723-7036 or cmurphy@murphyllp.com.

New Jersey Incentive Update - October 2017

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On Thursday, October 12, 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 four applications under the Grow NJ program, totaling $49,000,000 in tax credits. Once certified, the four projects will create or retain full-time jobs in Paterson, Jersey City, Edison, and Englewood Cliffs.

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, 232 projects have received awards, totaling over $4.4 billion in tax credits. Once certified, the 232 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.

If interested in learning more about Grow NJ or other economic development incentive programs, please do not hesitate to contact Murphy Partners LLP at (973) 877-6984 or info@murphyllp.com. 

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in real estate development and economic incentive advisory. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal services to meet the distinctive needs of our clients. Through the development of comprehensive legal strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

 

Murphy Partners LLP Featured in Real Estate NJ

Legislation Introduced to Amend the Grow NJ Program

On Monday, Senate Budget Committee Chairman Paul Sarlo introduced legislation (S3305) to amend the State’s main corporate tax incentive program. Among other things, the bill addresses issues related to the transfer and sale of tax credits under the Grow New Jersey Assistance Program (“Grow NJ”).

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).

Upon project completion and certification, Grow NJ tax credits can be applied against corporate business tax (“CBT”) liability. Because, in most cases, only C corporations have CBT liability, businesses structured in other forms (e.g., S corporation, LLC, LLP, etc.) must sell or assign, fully or partially, CBT credits to monetize the incentive. In lieu of applying the tax credits against the businesses own tax liability, the business may apply for a tax credit transfer certificate to sell or assign the credits. Currently, the Grow NJ program bars the tax credits from being sold for less than 75 percent of their value. N.J.A.C. 19:31-18.13(b).

Notably, while businesses are permitted to sell their unused tax credits, due to a discount associated with the sale and certain tax liability applied to the proceeds, the actual amount realized by the original recipient is almost certainly less than the amount of the original tax credit award, reducing the economic development power of the incentive.

Realizing that this may become an issue as more recipients of Grow NJ awards seek to sell there unusable tax credits, Senator Sarlo’s bill provides solutions aimed at eliminating this concern. 

First, the bill amends provisions related to the tax liability associated with the sale of unused tax credits. Currently, the gain realized from the sale of tax credits is considered income, imposing the State’s gross income tax on the seller, greatly reducing the value of the tax credit. The bill would exclude the gain or income derived from the sale or assignment, so that those businesses which cannot apply the tax credit to their tax liability may receive gains closer to the original incentive amount.

In addition, the bill would extend the time period in which a purchaser may use the tax credits. Currently, a purchaser may only apply the tax credits for up to three years, as opposed to carrying them forward for 20 years, as is the case for the original recipient. The bill extends the time period for the purchaser to 20 years. The bill also removes the requirement that the tax credits must be sold for 75 percent of their value in the case of a sale or assignment to an affiliate business of the original tax credit awardee.

The Grow NJ program has been wildly popular and incredibly successful. Since its implementation, 233 projects have received awards, totaling over $4.4 billion in tax credits. Once certified, the 233 projects will drive over $3.9 billion in private capital investment, create over 29,000 new jobs, and retain over 28,000 jobs at risk of leaving the State.  

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

Grow NJ Incentive Alert: Statutory Deadline for Mega Projects is Quickly Approaching

Businesses seeking an incentive award under Grow NJ’s “Mega Project” category must apply by September 18, 2017. The application must be presented to the NJEDA Board no later than December 2017.

Created under the Economic Opportunity Act of 2013, the Grow NJ Assistance Program 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 base tax credit amount for a project meeting the statutory definition of a Mega Project is $5,000 per job, per year, for each year of eligibility (up to a 10 year term). To qualify as a Mega Project, the project must fall into one of the following categories:

1. A qualified business facility located in a port district housing a business in the logistics, manufacturing, energy, defense, or maritime industries, either: (i) Having a capital investment in excess of $20,000,000, and at which more than 250 full-time employees of such business are created or retained; or (ii) at which more than 1,000 full-time employees of such business are created or retained;

2. A qualified business facility located in an aviation district housing a business in the aviation industry, in a Garden State Growth Zone, or in a priority area housing the United States headquarters and related facilities of an automobile manufacturer, either: (i) Having a capital investment in excess of $20,000,000, and at which more than 250 full-time employees of such business are created or retained; or (ii) at which more than 1,000 full-time employees of such business are created or retained;

3. A qualified business facility located in an urban transit hub housing a business of any kind, having a capital investment in excess of $50,000,000, and at which more than 250 full-time employees of a business are created or retained;

4. A project located in an area designated in need of redevelopment, pursuant to P.L. 1992, c. 79 (N.J.S.A. 40A:12A-1 et seq.), prior to the enactment of P.L. 2014, c. 63, within Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, or Salem counties having capital investment in excess of $20,000,000, and at which more than 150 full-time employees of a business are created or retained; or

5. For applications submitted after July 1, 2016, a qualified business facility primarily used by a business principally engaged in research, development, or manufacture of a drug or device, as defined in N.J.S.A. 24:1-1, or primarily used by a business licensed to conduct a clinical laboratory and business facility pursuant to the "New Jersey Clinical Laboratory Improvement Act," P.L. 1975, c. 166 (N.J.S.A. 45:9-42.26 et seq.), either: (i) Having a capital investment in excess of $20,000,000, and at which more than 250 full-time employees of such business are created or retained; or (ii) at which more than 1,000 full-time employees of such business are created or retained. 

N.J.A.C. 19:31-18.2

If interested in learning more about Grow NJ or other economic development incentive programs, please do not hesitate to reach us by telephone at (973) 877-6984 or email at info@murphyllp.com.

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

Murphy Partners LLP Names Roosevelt J. Donat Special Counsel and Director of Government Affairs

Murphy Partners LLP is pleased to announce that Roosevelt J. Donat has been named Special Counsel and Director of Government Affairs. Mr. Donat has extensive experience in the areas of government relations, law, and regulatory matters, in Newark and throughout New Jersey and New York.

“Roosevelt is an integral part of our growing team. He is a dynamic attorney and government affairs professional, and his relationships throughout the region are extensive. His ability to quickly analyze complex policy issues, while understanding the underlying political implications, will be an immediate value to our current and future clients,” says Kellen F. Murphy, the firm’s managing partner.   

Roosevelt formerly served as the Director of Government Relations and Strategic Planning for Brick City Development Corporation (the predecessor to the Newark Community Economic Development Corporation). In that role, he was responsible for developing the organization’s political engagement strategy with federal, state, and local elected officials, and business engagement strategy with corporations. Roosevelt also advised the organization’s department heads on the impact of proposed legislation and determined an appropriate response to that legislation. He regularly appeared before the Newark City Council and liaised with local and state officials to articulate, promote, and protect the interests of Brick City Development Corporation.  

After Brick City Development Corporation, Roosevelt worked in the New Jersey State Assembly Majority Office before he was recruited to Wall Street, where he served in the Global Legal Compliance and Regulatory Office at American International Group (AIG) -the world’s largest insurance organization. In this position, he was critically involved in the structuring, negotiating, and execution of a wide variety of domestic and international transactions and other business arrangements. On the government front, Roosevelt provided counsel to senior management, global business and legal functions, and operating companies with respect to insurance regulatory matters, and regularly liaised with Department of Insurance stakeholders from various jurisdictions.  

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

New Jersey Incentive Update - May 2017

On Thursday, May 11, 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 five applications under the Grow NJ Program, totaling over $74,000,000 in tax credits. Once certified, the five projects will bring jobs and capital investment to Camden, Lakewood, Hanover Township, and Woodcliff Lake.

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, 233 projects have received awards, totaling over $4.4 billion in tax credits. Once certified, the 233 projects will drive over $3.9 billion in private capital investment, create over 29,000 new jobs, and retain over 28,000 jobs at risk of leaving the State.

Murphy Partners LLP

If interesting in learning more about this and other programs available through the State of New Jersey, please do not hesitate to reach out to us by telephone at (973) 877-6984 or by email at info@murphyllp.com. In the meantime, please take some time to explore the website. We look forward to hearing from you soon.

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

New Jersey Expands Eligibility Under the State's Angel Investor Tax Credit Act

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Today, Governor Chris Christie signed into law a bill revising the “New Jersey Angel Investor Tax Credit Act.” (See P.L. 2017, c. 40). The legislation has been revised to provide tax credits for qualified investments in New Jersey emerging technology business holding companies. Previously, holding companies were ineligible to receive investments under the program. The legislation further provides direction for the distribution of tax credits allowed for qualified investments by New Jersey S corporations.

The New Jersey Angel Investor Tax Credit Program, which is administered by the New Jersey Economic Development Authority (“NJEDA”), allows for a tax credit against the corporation business tax and the gross income tax for qualified investments in a New Jersey emerging technology business. Under the Program, the tax credit is equal to 10 percent of the qualified investment made by the taxpayer, up to a maximum of $500,000 for the tax year for each qualified investment made by the taxpayer. The NJEDA is permitted to approve $25 million per calendar year in connection with qualified investments.

The legislation takes effect immediately, but applies retroactively to qualified investments made for tax years and taxable years beginning on or after January 1, 2012.

MURPHY PARTNERS LLP

If interested in learning more about these and other economic development incentive programs, please do not hesitate to reach out to us by telephone at (973) 877-6984 or by email at info@murphyllp.com. In the meantime, please take some time to explore the website. We look forward to hearing from you soon.

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.

New Jersey Economic Incentive Preview - April 2017

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.

MURPHY PARTNERS LLP

If interested in learning more about these and other programs available through the State of New Jersey, please do not hesitate to reach out to us by telephone at (973) 877-6984 or by email at info@murphyllp.com. In the meantime, please take some time to explore the website. We look forward to hearing from you soon.

Murphy Partners LLP is a boutique law firm specializing in governmental affairs, economic incentive advisory, and land use and redevelopment law. Headquartered in Newark, New Jersey, the firm was founded to provide effective, efficient, and creative legal and government affairs services to meet the distinctive needs of our clients. Through the development of comprehensive legal and government affairs strategies, our team works tirelessly to create a blueprint for success and advance our clients’ interests in every matter.