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New Jersey Incentive Update - February 2019

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On Tuesday, February 12, 2019, 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 three applications under the Grow New Jersey Assistance Program (Grow NJ). If approved, the three applicants could receive over $45,866,400 in tax credits (over 10 years).

Created under the Economic Opportunity Act of 2013, the Grow New Jersey Assistance Program (Grow NJ) is the State’s main job creation and retention incentive program. Under the Grow NJ program, businesses creating or retaining jobs in the State may be eligible for tax credits ranging from $500 to $5,000 per job, per year; with bonus credits ranging from $250 to $3,000 per job, per year (awards vary based on applicable criteria).

While the Grow NJ program has been wildly popular and incredibly successful, it has been the topic of significant debate, and will likely be modified upon its expiration in July of 2019. Governor Phil Murphy recently outlined his vision for new incentive programs, which would include the creation of the NJ Forward Tax Credit Program (which would take the place of Grow NJ as the State’s main job attraction incentive program) and the NJ Aspire Tax Credit Program (which would take the place of ERG as the State’s main incentive for developers). Below is a more detailed overview of the Governor’s plan.

The NJ Forward Tax Credit Program (NJ Forward) will likely take the place of Grow NJ as the State’s main job attraction incentive program. As proposed, NJ Forward will focus primarily on high-wage, high-growth sectors, including life sciences, information and high tech, clean energy, advanced manufacturing, advanced transportation and logistics, finance and insurance, and food and beverage. While the report does not outline specific programmatic details, it states that the proposed program will:

  • Increase focus on global/U.S. headquarters, R&D activities, and foreign direct investments

  • Prioritize new job creation rather than retained jobs

  • Encourage job creation in urban centers and other distressed communities, particularly those with public transit assets

  • Include an annual award cap and review to ensure fiscal sustainability and transparency

  • Feature lower base per-job credit amounts more in line with neighboring states, as well as more focused bonuses that ensure the administration’s policy goals

  • Limit transfers of credits to ensure that job-creating companies reap the primary benefits of taxpayer investment

  • Reward companies that invest in employee skill development and training

The NJ Aspire Tax Credit Program (NJ Aspire) will likely take the place of ERG as the State’s main incentive for developers. The administration is proposing the creation of a new place-based gap financing tool to help catalyze investments in commercial residential, and mixed-use (including parking) projects, with a particular focus on cities, downtowns, and suburban neighborhoods served by mass transit. As proposed, the program will facilitate the conversion of surface parking lots, vacant and/or abandoned lots, and other underutilized properties into job and tax-generating development opportunities. The program will also assist in the development of market-rate housing in distressed communities and, where appropriate, mixed-income and affordable housing near transit in suburban communities. NJ Aspire will be structured as a competitive tax credit grant, giving the NJEDA discretion in awarding grants to the most impactful and development-ready project.

In addition to NJ Forward and NJ Aspire, the Governor has also called for the creation of a new remediation and development tax credit program and a dedicated NJEDA loan fund to support brownfield redevelopment, the creation of a state historic preservation tax credit program, and multiple programs aimed at encouraging venture capital investment in high-growth, high-wage sectors.

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

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in real estate, development, and economic incentive advisory. With offices in Newark, New Jersey and New York City, 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.


Incentive Alert: Legislation Introduced to Amend and Extend the Grow NJ Program

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On November 26, 2018, Assemblywoman Eliana Pintor Marin introduced legislation to amend and extend the Grow New Jersey Assistance Program (“Grow NJ”). Among the changes to the current program, the bill provides certain reductions and expansions to the ability of a business to qualify for tax credits under the program, including new limits on the size of awards for new and retained jobs, and an extension of the deadline to apply for tax credits to July 2023 (the Grow NJ program is currently set to expire in July 2019).

Created under the Economic Opportunity Act of 2013, the Grow NJ program has been wildly popular and incredibly successful. Since its implementation, 250 projects have received awards, totaling over $4.7 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 250 projects will drive over $4.5 billion in private capital investment, create over 32,000 new jobs, and retain over 35,000 jobs at risk of leaving the State.

The full text of the legislation can be found here: https://www.njleg.state.nj.us/2018/Bills/A5000/4730_I1.PDF

If interested in learning more about Grow NJ or any other economic incentive program, please do not hesitate to contact Chris Murphy at (973) 877-6984 or cmurphy@murphyllp.com.   

MURPHY PARTNERS LLP

Murphy Partners LLP is a boutique law firm specializing in real estate, development, and economic incentive advisory. With offices in Newark, New Jersey and New York City, 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.


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.

Incentive Alert: Amendments to the Grow NJ Program Advance

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On Tuesday, multiple bills to amend the Grow New Jersey Assistance Program (Grow NJ) received favorable committee votes in Trenton. The Assembly Commerce and Economic Development Committee voted 9-0 to amend provisions related to the classification of Garden State Growth Zones (GSGZ) under the program. The committee also approved a bill which would require the New Jersey Economic Development Authority (NJEDA) to establish an “innovation zone” program, and modify the Grow NJ program to provide bonuses and other enhanced incentives to high-technology businesses located in an innovation zone.

Under A-4510, the Grow NJ program would be amended to add a sixth GSGZ, which will include the Atlantic City International Airport and the Federal Aviation Administration William J. Hughes Technical Center, and the area within a one-mile radius of the outermost boundary of that airport and technical center.

Currently, there are five GSGZs, including Atlantic City, Camden, Passaic, Paterson, and Trenton. Businesses relocating to or remaining in a GSGZ receive enhanced incentives, including a base tax credit of $5,000 per job, per year, for up to 10 years.

In addition to creating an additional GSGZ, the amendment also allows projects located in the six GSGZs to take advantage of provisions only available for projects located in Camden, including an alternative grant calculation to determine the total incentive amount available. This provision has driven many of the program’s largest projects (and awards) to Camden. As amended, all six GSGZs would be entitled to the same benefits.

The Assembly Commerce and Economic Development Committee also voted 7-0 to approve A-3747, which would require the NJEDA to establish an "innovation zone" program, which would consist of three innovation zones, each surrounding a research university or college or research hospital, and located in Greater Camden, Greater New Brunswick, and Greater Newark. The bill would require the NJEDA, with the approval of the State Treasurer, to modify its existing business assistance programs to give bonuses or other enhanced incentives to high-technology businesses located in an innovation zone.

Created under the Economic Opportunity Act of 2013, Grow NJ is the State’s main job creation and retention incentive program. Under the program, businesses creating or retaining jobs in the State may be eligible for tax credits ranging from $500 to $5,000 per job, per year; with bonus credits ranging from $250 to $3,000 per job, per year (awards vary based on applicable criteria).

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 commercial 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.

New Jersey Incentive Update - November 2017

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On Tuesday, November 14, 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 twelve applications under the Grow New Jersey Assistance Program (Grow NJ). If approved, the twelve applicants could receive over $221,000,000 in tax credits.

Created under the Economic Opportunity Act of 2013, the Grow New Jersey Assistance Program (Grow NJ) is the State’s main job creation and retention incentive program. Under the Grow NJ program, businesses creating or retaining jobs in the State may be eligible for tax credits ranging from $500 to $5,000 per job, per year; with bonus credits ranging from $250 to $3,000 per job, per year (awards vary based on applicable criteria).

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) 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.

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.

 

NJBIZ Op-ed: The Importance of Business Incentive Programs in a Changing Economy

A recent op-ed in NJBIZ, written by Chris J. Murphy, on the importance of business incentive programs in a changing economy. 

http://www.njbiz.com/article/20170905/INDINSIGHTS/170909960/the-importance-of-business-incentive-programs-in-a-changing-economy

Murphy Partners LLP Featured in Real Estate NJ

New Jersey Incentive Update - August 2017

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.

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.

New York Extends Tax Incentives for Businesses and Developers in Lower Manhattan

As New Jersey and New York City continue to compete for marquee corporate tenants, Governor Andrew Cuomo recently signed legislation to extend tax incentives aimed at attracting businesses and developers to Lower Manhattan. The legislation extends five programs, including the Commercial Revitalization Program (CRP), the Industrial and Commercial Abatement Program, the Sales Tax Exemption Program, the Lower Manhattan Relocation Employment Assistance Program (LM-REAP), and the Lower Manhattan Energy Program.

While each program is different in size and scope, the ultimate goal remains the same: to increase private capital investment and encourage job growth in an increasingly competitive environment. The legislation extends the following programs:

  • Commercial Revitalization Program (CRP) provides tax incentives to owners investing in building improvements in nonresidential or mixed-use buildings built before 1975.

  • Industrial and Commercial Abatement Program provides a property tax abatement for up to 25 years for building, modernizing, expanding, or otherwise physically improving industrial and commercial buildings.

  • Sales Tax Exemption Program provides an abatement for goods purchased for building out space in Lower Manhattan.

  • Lower Manhattan Relocation Employment Assistance Program (LM-REAP) provides an annual credit of $3,000 per job, per year for companies moving to lower Manhattan from outside of the city.

  • Lower Manhattan Energy Program provides property owners and commercial tenants in eligible buildings located in lower Manhattan up to 45% reduction in electricity transportation and delivery costs for up to twelve years.   

On the other side of the river, New Jersey still offers highly competitive tax incentives for businesses and developers, including the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment and Growth (ERG) Program.

Created under the Economic Opportunity Act (“EOA”) of 2013, Grow NJ is the State’s main job creation and business retention incentive program. The program is designed 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. Businesses meeting certain requirements may be eligible for tax credits ranging from $500 to $5,000 per job, per year; with bonus credits ranging from $250 to $3,000 per job, per year.

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.  

Also created under the EOA, the ERG Program is designed to help developers address revenue gaps in development projects (defined as having insufficient revenues to support the project debt service under a standard financing scenario). The Program can also apply to projects that have a below market development margin or rate of return.

In most cases, the base amount of the reimbursement cannot exceed 20 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. 

With limited exceptions, the annual percentage amount of reimbursement shall not exceed an average of 75% of the annual incremental state revenues directly realized from businesses operating on the redevelopment project premises. These revenues are then paid to the developer in the form of a grant derived from the realized revenues.

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.

As state and local governments continue to compete for new and existing business, policymakers will continue to leverage tax incentives in an effort to attract jobs and private capital investment. In order to remain effective, tax incentive programs must naturally evolve over time. While some have argued against using tax incentives as part of an overall economic development strategy, the idea that one state would unilaterally disarm in this highly competitive market is hard to imagine. Tax incentives will not always close the deal. However, for states to remain competitive, they must continue to be part of the conversation.  

If interesting in learning more about these and other 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.