Phil Murphy

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: NJEDA Releases Application for NJ Film Tax Credit Program

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On Monday, December 17, 2018, the New Jersey Economic Development Authority (NJEDA) released the much-awaited application for the NJ Film Tax Credit Program.

Created by legislation passed earlier this year, the Film & Digital Media Tax Credit Program will allow for taxpayers (in most cases, production companies) to seek a tax credit for qualified film production and digital media content production expenses. Applications will be approved by the New Jersey Economic Development Authority (NJEDA) and the Director of the Division of Taxation in the Department of the Treasury. Approved applicants are entitled to claim a credit against CBT or GIT liability in an amount equal to 30 percent (35 percent in limited cases) of the qualified film production expenses or 20 percent (25 percent in limited cases) of the qualified digital media content production expenses.

Importantly, the NJEDA only released the application for the film production component of the program. The digital media application is expected to be released in January 2019.

The full press release from the NJEDA can be found here: https://www.njeda.com/filmtaxcreditapplicationrelease

If interested in learning more this program 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: Governor Murphy Proposes New Incentive Programs

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On Monday, Governor Murphy outlined his plan for revamping New Jersey’s main incentive programs, including the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment and Growth (ERG) Program, which are set to expire in July of 2019. While the creation of any new program will require new legislation, this is the first step in a process that will likely result in new incentive programs for businesses and developers.

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 report also calls 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 these or other economic development incentive programs, please do not hesitate to contact Chris Murphy at Murphy Partners LLP at (973) 723-7036 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: Governor Murphy Signs the ERG Bond Financing Act

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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 info@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: Rutgers University Report Recommends Changes to New Jersey’s Business Incentive Programs

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On Wednesday, the New Jersey Economic Development Authority (NJEDA) submitted a report to Governor Phil Murphy, conducted by Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, which (among other things) recommended changes to the State’s business incentive programs, including the Grow New Jersey Assistance Program (Grow NJ) and the Economic Redevelopment and Growth Grant Program (ERG).

The report (which can be found here) found the following:   

  • There has been a significant volume of project approvals under Grow NJ, which are associated with significant volumes of retained and created jobs, but which will also generate a substantial offset to the Corporate Business Tax and Insurance Premium Tax in the years ahead;

  • Commercial ERG projects leverage a considerable amount of private investment.

  • Given the long lead time associated with Grow NJ and ERG projects, it is too soon to fully evaluate the impact of these programs on the State’s economy;

  • Projects approved under Grow NJ are generally concentrated in the northern, more populous counties of the State. A significant percentage of project funding in the eight southern counties has been concentrated in Camden;

  • Redundancies in the Grow NJ base and bonus award structure are potentially providing more generous incentives than intended by the statute;

  • Because certain bonuses have been underutilized, it is not clear that the program has advanced certain policy goals intended by the legislation such as clean energy investment and the creation of incubators;

  • There is an opportunity to improve EDA’s analysis of proposed incentive projects.

The report suggested the following to improve the programs:

  • A deeper analysis of the types and quality of jobs created or retained, and whether some or all of the related economic activity would have happened with lower or no incentives.

  • A review of the overall impact of the reduction in Corporate Business Tax revenues (which would be made up for by higher Gross Income Tax from created or retained jobs), given the constitutional requirement that the Gross Income Tax fund property tax relief while the Corporate Business Tax and Insurance Premium Tax are the primary resources for the General Fund.

  • Given the Grow NJ program’s goals of job creation and retention, the report recommends that the alternative approach used in calculating certain awards in the city of Camden (the “Camden alternatives”) be revised to tie awards more closely to the employment created by these firms.

  • NJEDA should consider eliminating or revising the bonus for Transit Oriented Development in Urban Transit Hubs and Garden State Growth Zones. This bonus may be redundant in most cases in these jurisdictions, where it accounts for about 21 percent, or about $250 million of the total award value for projects qualifying for the bonus.

The programs are currently set to expire in July 2019. With the sunset of the programs only a year away, legislators will soon start to discuss potential changes to the programs. While change may be on the horizon, one thing is clear--incentives will continue to be part of New Jersey’s economic development toolkit.

If interested in learning more about state and local incentives, 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. 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 Jersey Legislature Passes ERG Bond Financing Act

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The New Jersey Senate and Assembly have both passed legislation (S-1849 / A-2041), known as the Economic Redevelopment and Growth Grant Bond Financing Act, which will create a mechanism to finance projects under the Economic Redevelopment and Growth (ERG) grant 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.

Currently, developers receiving awards under the ERG program are required to seek financing for up-front costs associated with the project, as the ERG payments are unavailable until the project has been fully completed and certified. The ERG Bond Financing Act seeks to assist developers with up-front project costs 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 for projects that receive ERG grants. The bonds would be 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.

The bill is currently awaiting the signature of Governor Murphy.

If interested in learning more about state and local development incentives, 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. 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.

Alert: NJEDA to Appoint New CEO at Board Meeting on Tuesday

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By Chris J. Murphy of Murphy Partners LLP

On Tuesday, February 13, 2018, the New Jersey Economic Development Authority (NJEDA) will hold its monthly board meeting in Trenton. Among the actions to be taken, the Board will vote to approve the appointment of Tim Sullivan as Chief Executive Officer.

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Tim Sullivan will bring years of economic development experience to the role of CEO. Since 2014, he has served as deputy commissioner to the Connecticut Department of Economic and Community Development (DECD). Prior to his time spent in Connecticut, Sullivan served as chief of staff to the New York City deputy mayor for economic development from 2010-2013. His experience in both New York City and Connecticut should prove valuable in his new role, as he truly understands how difficult it is to compete for business and jobs in an ever-changing economy.  

As we all know, historically, New Jersey has not had a stellar reputation when it comes to business friendliness. Since 2015, the Tax Foundation, a Washington DC-based think tank, has ranked New Jersey as having the worst business climate in the country. Indeed, New Jersey is one of only six states in the country with a corporate tax rate of 9% or more.    

The Grow New Jersey Assistance Program (Grow NJ), however, has helped New Jersey attract and retain thousands of jobs and billions of dollars in investment, and remains an important tool in the state’s economic development toolbox.  

Created under the Economic Opportunity Act of 2013, the 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, 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 $4.6 billion in private capital investment, create over 31,000 new jobs, and retain over 35,000 jobs at risk of leaving the State.

I have no doubt that the new CEO will do an incredible job. His experience throughout the region will prove immensely valuable. His understanding of the competitive nature of economic development will color his tenure at the NJEDA. Best of luck, Tim Sullivan. We are all pulling for you.

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.

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Incentive Alert: Grow NJ Program Amended

On August 7, 2017, Governor Chris Christie signed legislation to amend the Grow New Jersey Assistance Program (“Grow NJ”). The amendment (ACS for A-4432/SCS for S-2841), which passed both the Senate and the Assembly with broad bipartisan support, is meant to encourage businesses to enter into collaborative research relationships with New Jersey colleges and universities.

Now, 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 (including, transportation, manufacturing, defense, energy, logistics, life sciences, technology, health, and finance) 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 legislation establishes a new 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 legislation requires the New Jersey Economic Development Authority (“NJEDA”), in consultation with the Secretary of Higher Education, to establish standards for collaborative research relationships between businesses in targeted industries and colleges and universities necessary for a business to qualify.

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.

These recent changes to the Grow NJ program could signal a shift towards incentives aimed at encouraging job growth in industries focused on innovation. In an election year in New Jersey, the State’s economic incentive programs have been put under a microscope. While both candidates for governor believe that incentives have a role to play in the State’s overall economic development strategy, it is hard to tell exactly how and when the current programs will change. These recent amendments, passed with broad bipartisan support, could be a sign that the next round of incentives will be focused on the “innovation economy.” Putting the State’s resources into higher paying, skill-based jobs, could be the future.

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.

Phil Murphy and Kim Guadagno Win Primary Elections

It’s official. Phil Murphy and Kim Guadagno will face off this November in a race to determine who will be New Jersey’s next governor.

Roosevelt J. Donat, Special Counsel and Director of Government Affairs at Murphy Partners LLP, celebrates with Phil Murphy, Democratic nominee for New Jersey governor.

Roosevelt J. Donat, Special Counsel and Director of Government Affairs at Murphy Partners LLP, celebrates with Phil Murphy, Democratic nominee for New Jersey governor.

Phil Murphy, the former U.S. ambassador to Germany under President Obama, won a highly anticipated victory to become the Democratic nominee for governor. In total, six candidates sought the Party’s nomination, including state Senator Raymond Lesniak, former federal prosecutor Jim Johnson, and state Assemblyman John Wisniewski. Ultimately, Murphy’s backing of all 21 Democratic county organizations, along with a well-organized team made up of some of New Jersey’s best political operatives, proved decisive.  

On the Republican side, Lt. Governor Kim Guadagno won the Republican Party’s top spot, beating her closest competitor, state Assemblyman Jack Ciattarelli, by a decisive margin. In a hard-fought battle, Guadagno was one of five candidates seeking the Party’s nomination. Currently serving in her second term as New Jersey’s first lieutenant governor, Guadagno has spent the last eight years traveling the state, leading New Jersey’s economic development efforts.

Murphy and Guadagno will face off this November. In a state with 800,000 more registered Democrats, most observers give Murphy the edge. Nevertheless, Guadagno is a fierce campaigner and will prove to be a true competitor in the coming months.

We wish nothing but the best to both candidates and look forward to watching a hard-fought general election. The voters of New Jersey deserve nothing less.

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.