On August 17, 2018, Governor Phil Murphy signed into law the Economic Redevelopment and Growth Grant Bond Financing Act (P.L. 2018, c. 97), which creates a mechanism to finance projects under the Economic Redevelopment and Growth (ERG) Program.
Created under the Economic Opportunity Act of 2013, the ERG program is the State’s primary incentive for developers. Pursuant to the program rules, a developer that can demonstrate that its redevelopment project requires a subsidy to close a project financing gap may apply for a grant equaling no more than 20% of the total cost of a project (30% in a Garden State Growth Zone), of which the developer must make a 20% equity investment.
In accordance with a redevelopment incentive grant agreement, beginning upon the receipt of occupancy permits for any portion of the redevelopment project, the developer will receive incremental State revenues directly realized from businesses operating on or at the site of the redevelopment project. The developer may apply for an incentive grant in the amount up to 75% of the annual incremental tax revenues generated by the project over a 20 year period. If the redevelopment project is located within a Garden State Growth Zone, 85% of the projected annual incremental revenues may be pledged toward the award.
Prior to the enactment of the ERG Bond Financing Act, developers receiving awards under the ERG program were required to seek financing for up-front costs associated with the project, as the ERG payments were unavailable until the project had been fully completed and certified. The ERG Bond Financing Act creates a mechanism for developers to monetize an ERG award by allowing the municipality in which a project is located to (either directly or through an application to the New Jersey Economic Development Authority or similar public instrumentality of the State) issue bonds secured by a pledge of the ERG grant payments, and further secured by municipal liens and/or special assessments on the property benefiting from the improvements. This will allow developers to finance the up-front costs associated with construction, without having to seek gap financing.
If interested in learning more about state and local development incentives, please do not hesitate to contact Murphy Partners LLP at (973) 723-7036 or email@example.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.
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 firstname.lastname@example.org.
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 email@example.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.