As David Engle from RIA reports-Both Houses of the New Jersey Legislature have approved the Economic Opportunity Act of 2014 (A3213). The legislation conforms to all of the changes requested by Governor Chris Christie in his conditional veto message and is expected to be signed by the governor. The legislation makes adjustments to numerous tax incentives for development in New Jersey.
Grow NJ tax credit changes. The legislation would make several revisions to the GROW NJ tax credit program. Here are some of the major changes:
Garden State Growth Zones: Atlantic City would be designated as the fifth Garden State Growth Zone. This designation would render qualifying projects in Atlantic City eligible for maximum Economic Redevelopment and Growth (ERG) grants.
Mega project status: The legislation would bestow “mega project” status, which qualifies projects for larger tax credit amounts than they would otherwise receive, to eligible capital investments of at least $20 million in a business facility located in an area designated in need of redevelopment in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean or Salem counties that will create or retain more than 150 full-time positions.
Minimum capital investment requirements: The legislation would reduce the minimum capital investment requirement for the rehabilitation and improvement of warehousing, logistics, and research and development premises for the continued use of the premises from $40 to $20 per square foot of gross leasable area, and for the new construction of such premises from $120 to $60 per square foot of gross leasable area.
Bonus for investing in vacant property: The legislation would create a new annual $1,000 bonus award per full-time job created or retained for investments in business facilities that include over 100,000 square feet of office or laboratory space that has been vacant for over a year. The base award for such projects ranges from $500 to $5,000 per full-time job created or retained per year, depending on project characteristics. Projects would also qualify for additional bonus awards.
Incubator facilities: The legislation would ease the eligibility criteria for incubator facilities located near a research institution, teaching hospital, college or university in a GROW NJ incentive area by lowering the minimum required square footage of office, laboratory, and industrial space from 100,000 square feet to 50,000 square feet, and the percentage of the gross leasable area that must be for technology startup company use from 75% to 50%.
Creditable capital investments: The legislation would include development expenses in Garden State Growth Zone municipalities as creditable capital investments. The legislation would no longer treat as a creditable capital investment, the acquisition costs of real property located in any GROW NJ incentive area, with the exception of the five Garden State Growth Zones, that was purchased within 24 months prior to the submission of a GROW NJ application.
Calculation of annual tax credit: The legislation would change the calculation of the annual tax credit amount per retained job from 50% of the base amount plus any applicable bonuses to the lesser of 50% of the base amount plus any applicable bonuses or 10% of the capital investment divided by the number of retained and new full-time jobs (except that certain limited projects will continue to earn job retention tax credits equal to 100% of the base amount plus any applicable bonuses). The legislation would allow for the upward revision of tax credit amounts for City of Camden and Atlantic City-based businesses that exceed the full-time employment targets stipulated in their incentive agreements. Such businesses would also newly count as retained full-time jobs employees previously employed elsewhere in New Jersey and transferred to the Camden or Atlantic City location.
Consolidated applications for credit: The legislation would allow non-profit organizations in Garden State Growth Zone municipalities and qualified incubator facilities in any GROW NJ incentive area to file consolidated tax credit applications for projects comprised of several individual businesses that would not, on their own, qualify for tax credits. The legislation would also allow the developer of a project that would bring a large full-service supermarket to the City of Camden or Atlantic City to apply for tax credits on behalf of the supermarket and file a consolidated tax credit application on behalf of several individual businesses that would not, on their own, meet tax credit eligibility criteria.
Exemption for City of Camden and Atlantic City projects: The bill would exempt City of Camden and Atlantic City-based projects for which applicants seek annual tax credits exceeding $4 million from the general requirement that projects for which applicants seek annual tax credits exceeding $4 million earn the lesser of the statutory annual maximum amounts for such projects or the amounts the Economic Development Agency (EDA) deem necessary for project completion. City of Camden and City of Atlantic City-based projects for which applicants seek annual tax credits exceeding $4 million would receive statutory annual maximum amounts.
Sale of tax credits: The bill would impose a new $25,000 minimum amount on tax credits that recipients would be able to sell to other taxpayers.
Tax credit program for redevelopers donating public infrastructure. The legislation would establish a new 5-year tax incentive program for redevelopers that donate to a governmental entity public infrastructure with a minimum $5 million fair market value or open space without improvements with a minimum $1 million fair market value. Redevelopers would be able to apply for a corporation business tax credit equal to the cost of providing the public infrastructure, but not more than $5 million. To qualify for the credit the public infrastructure would have to be: (1) donated or built and donated after January 1, 2013; (2) part of a new capital investment of more than $10 million in a building or complex of buildings, which must be completed within two years following tax credit approval; and (3) part of a redevelopment project that has not received a GROW NJ tax credit or an ERG tax credit or grant. Incentive awards would be available statewide and would not be contingent upon the incentives being vital to the execution of a redevelopment project or its public infrastructure components. Moreover, redevelopment projects and their attendant public infrastructure components would not be required to generate indirect fiscal benefits to the state in excess of the cost of the tax incentive. The EDA would be able to award no more than $25 million in total tax credit awards over the program's 5-year lifespan.
New limits on sale of tax credits. The legislation would reduce from $100,000 to $25,000 the general minimum Urban Transit Hub tax credit amount that recipients would be able to sell to other taxpayers and would eliminate the existing authority for recipients to make one transfer of less than $100,000 per year.
ERG program changes. The legislation would defer from July 1, 2015 to July 1, 2016 the application deadline under the ERG tax credit program for residential redevelopment projects and from July 28, 2015 to July 28, 2018 the date by which eligible residential redevelopment projects would be required to have obtained temporary certificates of occupancy.
Grow NJ tax credit changes. The legislation would make several revisions to the GROW NJ tax credit program. Here are some of the major changes:
Garden State Growth Zones: Atlantic City would be designated as the fifth Garden State Growth Zone. This designation would render qualifying projects in Atlantic City eligible for maximum Economic Redevelopment and Growth (ERG) grants.
Mega project status: The legislation would bestow “mega project” status, which qualifies projects for larger tax credit amounts than they would otherwise receive, to eligible capital investments of at least $20 million in a business facility located in an area designated in need of redevelopment in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean or Salem counties that will create or retain more than 150 full-time positions.
Minimum capital investment requirements: The legislation would reduce the minimum capital investment requirement for the rehabilitation and improvement of warehousing, logistics, and research and development premises for the continued use of the premises from $40 to $20 per square foot of gross leasable area, and for the new construction of such premises from $120 to $60 per square foot of gross leasable area.
Bonus for investing in vacant property: The legislation would create a new annual $1,000 bonus award per full-time job created or retained for investments in business facilities that include over 100,000 square feet of office or laboratory space that has been vacant for over a year. The base award for such projects ranges from $500 to $5,000 per full-time job created or retained per year, depending on project characteristics. Projects would also qualify for additional bonus awards.
Incubator facilities: The legislation would ease the eligibility criteria for incubator facilities located near a research institution, teaching hospital, college or university in a GROW NJ incentive area by lowering the minimum required square footage of office, laboratory, and industrial space from 100,000 square feet to 50,000 square feet, and the percentage of the gross leasable area that must be for technology startup company use from 75% to 50%.
Creditable capital investments: The legislation would include development expenses in Garden State Growth Zone municipalities as creditable capital investments. The legislation would no longer treat as a creditable capital investment, the acquisition costs of real property located in any GROW NJ incentive area, with the exception of the five Garden State Growth Zones, that was purchased within 24 months prior to the submission of a GROW NJ application.
Calculation of annual tax credit: The legislation would change the calculation of the annual tax credit amount per retained job from 50% of the base amount plus any applicable bonuses to the lesser of 50% of the base amount plus any applicable bonuses or 10% of the capital investment divided by the number of retained and new full-time jobs (except that certain limited projects will continue to earn job retention tax credits equal to 100% of the base amount plus any applicable bonuses). The legislation would allow for the upward revision of tax credit amounts for City of Camden and Atlantic City-based businesses that exceed the full-time employment targets stipulated in their incentive agreements. Such businesses would also newly count as retained full-time jobs employees previously employed elsewhere in New Jersey and transferred to the Camden or Atlantic City location.
Consolidated applications for credit: The legislation would allow non-profit organizations in Garden State Growth Zone municipalities and qualified incubator facilities in any GROW NJ incentive area to file consolidated tax credit applications for projects comprised of several individual businesses that would not, on their own, qualify for tax credits. The legislation would also allow the developer of a project that would bring a large full-service supermarket to the City of Camden or Atlantic City to apply for tax credits on behalf of the supermarket and file a consolidated tax credit application on behalf of several individual businesses that would not, on their own, meet tax credit eligibility criteria.
Exemption for City of Camden and Atlantic City projects: The bill would exempt City of Camden and Atlantic City-based projects for which applicants seek annual tax credits exceeding $4 million from the general requirement that projects for which applicants seek annual tax credits exceeding $4 million earn the lesser of the statutory annual maximum amounts for such projects or the amounts the Economic Development Agency (EDA) deem necessary for project completion. City of Camden and City of Atlantic City-based projects for which applicants seek annual tax credits exceeding $4 million would receive statutory annual maximum amounts.
Sale of tax credits: The bill would impose a new $25,000 minimum amount on tax credits that recipients would be able to sell to other taxpayers.
Tax credit program for redevelopers donating public infrastructure. The legislation would establish a new 5-year tax incentive program for redevelopers that donate to a governmental entity public infrastructure with a minimum $5 million fair market value or open space without improvements with a minimum $1 million fair market value. Redevelopers would be able to apply for a corporation business tax credit equal to the cost of providing the public infrastructure, but not more than $5 million. To qualify for the credit the public infrastructure would have to be: (1) donated or built and donated after January 1, 2013; (2) part of a new capital investment of more than $10 million in a building or complex of buildings, which must be completed within two years following tax credit approval; and (3) part of a redevelopment project that has not received a GROW NJ tax credit or an ERG tax credit or grant. Incentive awards would be available statewide and would not be contingent upon the incentives being vital to the execution of a redevelopment project or its public infrastructure components. Moreover, redevelopment projects and their attendant public infrastructure components would not be required to generate indirect fiscal benefits to the state in excess of the cost of the tax incentive. The EDA would be able to award no more than $25 million in total tax credit awards over the program's 5-year lifespan.
New limits on sale of tax credits. The legislation would reduce from $100,000 to $25,000 the general minimum Urban Transit Hub tax credit amount that recipients would be able to sell to other taxpayers and would eliminate the existing authority for recipients to make one transfer of less than $100,000 per year.
ERG program changes. The legislation would defer from July 1, 2015 to July 1, 2016 the application deadline under the ERG tax credit program for residential redevelopment projects and from July 28, 2015 to July 28, 2018 the date by which eligible residential redevelopment projects would be required to have obtained temporary certificates of occupancy.
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