legislation

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: 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.

Incentive Alert: New Jersey Legislature Advances PILOT Bill

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On Monday, the Senate Budget and Appropriations Committee unanimously voted to advance legislation (S-1701) that would add additional requirements for the approval of PILOT (payment in lieu of taxes) agreements between municipalities and developers.

Among other things, the bill would require developers seeking a PILOT to include a cost-benefit analysis as part of their application. In addition, municipal officials would be required to submit an independent analysis of the proposed redevelopment project, including the impact on local revenue collections, the local school district and county government.

The New Jersey League of Municipalities opposes the bill, and argues that it will increase costs and limit local decision-making authority.

NAIOP New Jersey issued a statement highlighting its concern with an amendment to the bill that would require the annual service charge to be distributed in proportion to the amount of revenue received by the county, municipality, and school district from the property tax. The organization argues that the amendment will greatly limit the usefulness of PILOT agreements.

While an identical bill has been introduced in the Assembly and referred to the State and Local Government Committee, it has yet to receive a vote.  

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.

Incentive Alert: Film Tax Credit Legislation Advances in New Jersey Senate

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Last week, the Senate Budget and Appropriations Committee voted 11-1 to advance the “Garden State Film and Digital Media Jobs Act.” As amended, the bill provides a credit against the corporation business tax (CBT) and the gross income tax (GIT) for certain expenses incurred for the production of certain films and digital media content in the State.

Under the bill (S122), applications approved by the New Jersey Economic Development Authority (NJEDA) and the Director of the Division of Taxation in the Department of the Treasury, may entitle a taxpayer 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.

Historically, New Jersey has utilized tax credits to incentivize film and media production projects. Following the prior program’s expiration a year earlier, in 2016, Governor Christie vetoed a bill that would have created a film and media tax credit program.

On the other side of the river, New York’s Film Production Tax Credit program (NYS Tax Law § 24) has been wildly successful in attracting film production to New York and creating film industry-related jobs throughout the State. The program provides certain tax incentives to companies that produce qualified feature films, television movies, and television series and pilots in New York State, and/or incur post-production costs in the State associated with the original creation of such productions.  

While it is certainly too early to tell if the Garden State Film and Digital Media Jobs Act will become law, this is definitely a step in the right direction.

If interested in learning more about this 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.

 

Incentive Alert: Grow NJ Program changed to allow for easier transfer of tax credits

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On Monday, New Jersey’s Governor signed a bill into law that will affect the ability of certain companies to monetize tax credits under the Grow New Jersey Assistance Program (Grow NJ).

Under the Grow NJ program, the tax credits earned can only be used to offset specific state tax liability, including the State’s Corporate Business Tax (CBT). Generally, only C corporations have CBT liability. Companies structured in other forms (e.g., LLC, LLP, etc.) are required to apply for a tax credit transfer certificate, and sell the tax credits, in order to monetize the incentive. The original Grow NJ legislation created a floor of 75 percent minimum value on the sale, assignment, or transfer of tax credits, and limited the time in which a transferee could use the tax credits to offset liability to three years. Prior to the signing of this law, there was also tax liability associated with the gain or income derived from the sale or assignment of the tax credits at both the federal and state level.

The new law (P.L.2017, c.313.) revises the tax credit transfer certificate provisions under the Grow NJ program, and revises the tax treatment of gains and income associated with the sale or assignment of the tax credit transfer certificates.

First, the new law extends the time period in which transferees can use the tax credits from three years to 20 years, making the time period for redemption identical to the period permitted for the original tax certificate holder.

In addition, the law exempts tax credit transfers to affiliates of the original tax credit holder from the 75 percent minimum value requirement related to the sale or assignment of tax credits.

Lastly, and most importantly, the law excludes the gain or income derived from the sale or assignment of tax credit transfer certificates from taxation at the State level.

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 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: Amazon Incentive Bill Signed by Governor Christie

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On Thursday, Governor Chris Christie signed bipartisan legislation authorizing the creation of the “Transformative Headquarters Economic Assistance Program.” The new program, which complements the Grow New Jersey Assistance Program (Grow NJ), is meant to encourage economic development and new job creation at a corporate headquarters that is transformational to the regional economy.

To be eligible under the new program, a business must create at least 30,000 new full-time jobs, and spend at least $3 billion in capital investment. While there is no monetary cap on the value of credits under the new program, the total amount of the tax credits for each new full-time job is $10,000 per year (for up to 10 years).

Similar to the Grow NJ program, an applicant’s chief executive officer (or highest ranking U.S. officer) is required to demonstrate that the award of tax credits will be a material factor in the decision to create the jobs listed in the application. In addition, the award of tax credits under the new program must yield a net positive benefit to the State equaling at least 115 percent of the requested tax credit amount. The bill requires a business to submit an application to the New Jersey Economic Development Authority (NJEDA) prior to July 1, 2019.

While the legislation does not specifically name the Amazon as the intended recipient of the incentive, the new program was created to help New Jersey compete to become the home of Amazon HQ2. This bipartisan bill could help make New Jersey a serious contender.

If interested in learning more about this program and 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 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: 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.