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New Jersey Future Redevelopment Forum
March 14, 2014
GROW NJ TAX CREDITS
and
ECONOMIC REDEVELOPMENT
& GROWTH GRANTS
Anne S...
Detailed Legal Requirements
• Economic Opportunity Act of 2013 (PL 2013, c.
161)
• Further Amendment Expected (EO 2014 Par...
1. Public Interest – Does project need help, and
can you prove you will provide a net benefit?
2. Prevailing Wage
3. Does ...
1. Public Interest
Grow NJ:
• EDA approval will only be granted if the
credits are a “material factor” in the
decision mak...
1. Public Interest
ERG:
• One needs to be able to prove that there
is a project financing gap
• In non-residential project...
2. Prevailing Wage
Grow NJ and ERG:
One must consider whether the costs of
compliance with the prevailing wage
requirement...
3. Jobs (Grow) or Generate Specific
Taxes (ERG)
Grow NJ:
You may find it hard to make the
application worthwhile unless yo...
3. Jobs (Grow) or Generate Specific
Taxes (ERG)
ERG:
• Is your project going to generate
specific types of taxes that you ...
4. Tax Credits issued under Grow
or ERG
Grow NJ and ERG:
• Transfer of Tax Credits may well be
necessary
• For Grow NJ and...
5. If your project is residential, stay
tuned
ERG Tax Credits:
• EO 2013 requires that the applicant must
complete project...
Location, Location, Location
• A statute that will help implement State
Plan
• A statute that will help redevelopment
Location, Location, Location/Grow
While the amount of the tax credits under Grow
NJ does increase if the nature of the job...
Location, Location, Location/Grow
For example, if you are willing to bring 250 jobs to,
and invest $50 Million in, “a mega...
Location, Location, Location/Grow
“urban transit hub” =
• Camden
• East Orange
• Elizabeth
• Hoboken
• Jersey City
• Newar...
Location, Location, Location/Grow
Bring jobs to a “Garden State Growth
Zone” municipality
• Base amount of tax credits of ...
Location, Location, Location/Grow
“Garden State Growth Zone” =
• Paterson
• Passaic
• Trenton
• Camden
Location, Location, Location/Grow
Bring jobs to a project in an “urban transit
hub municipality”:
• Base amount of tax cre...
Location, Location, Location/Grow
“urban transit hub municipality” =
• Camden
• East Orange
• Elizabeth
• Hoboken
• Jersey...
Location, Location, Location/Grow
Bring jobs to a project in a “distressed
municipality”:
• Base amount of tax credits of ...
Location, Location, Location/Grow
“distressed municipality” = See list on
EDA website
• Municipalities such as:
–Neptune
–...
Location, Location, Location/Grow
Bring jobs to a project in a location that is
“a deep poverty pocket”:
• you would be en...
Location, Location, Location/Grow
By comparison, the base amount of credits
in other areas that are “eligible,” but
perhap...
Location, Location, Location/ERG
If you are willing to undertake a
“redevelopment project”:
• not only “projects located i...
Location, Location, Location/ERG
The percentage of total project costs that
can be funded with incremental taxes,
providin...
Location, Location, Location/ERG
As for residential ERG projects,
most of the $600 Million of tax
credits authorized for s...
Location, Location, Location/ERG
(a) $250,000,000 shall be restricted to qualified
residential projects within following c...
Location, Location, Location/ERG
(b) $250,000,000 shall be restricted to
qualified residential projects located in:
–(i) u...
Location, Location, Location/ERG
–(iv) Municipality in which a Schools
Development Authority district is located
in Hudson...
Location, Location, Location/ERG
(c) $75,000,000 shall be restricted to
qualified residential projects in
–(i) distressed ...
Location, Location, Location/ERG
(d) $25,000,000 shall be restricted to
qualified residential projects that are
located wi...
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Nj future redevelopment forum 2014 eoa babineau

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Transcript of "Nj future redevelopment forum 2014 eoa babineau"

  1. 1. New Jersey Future Redevelopment Forum March 14, 2014 GROW NJ TAX CREDITS and ECONOMIC REDEVELOPMENT & GROWTH GRANTS Anne S. Babineau, Esq. Wilentz, Goldman & Spitzer, P.A. 90 Woodbridge Center Drive Woodbridge, New Jersey 07095
  2. 2. Detailed Legal Requirements • Economic Opportunity Act of 2013 (PL 2013, c. 161) • Further Amendment Expected (EO 2014 Parts 1, 2, etc) • Proposed EDA Regulations published Jan. 2014 • NJ EDA – Determinations regarding Applications – see NJEDA website
  3. 3. 1. Public Interest – Does project need help, and can you prove you will provide a net benefit? 2. Prevailing Wage 3. Does project generate Jobs, or generate specific types of taxes 4. Transfer of Tax Credits may be necessary. 5. If Residential, stay tuned for legislative amendments Key Preliminary Questions
  4. 4. 1. Public Interest Grow NJ: • EDA approval will only be granted if the credits are a “material factor” in the decision making of the user (tenant or owner) • EDA determines there is a net positive benefit to the State equaling at least 110% of the requested tax credits
  5. 5. 1. Public Interest ERG: • One needs to be able to prove that there is a project financing gap • In non-residential projects, one must provide evidence that there will be a net benefit to the State or Local entity that is assisting the project
  6. 6. 2. Prevailing Wage Grow NJ and ERG: One must consider whether the costs of compliance with the prevailing wage requirements outweigh the value of the incentive program to the applicant
  7. 7. 3. Jobs (Grow) or Generate Specific Taxes (ERG) Grow NJ: You may find it hard to make the application worthwhile unless you are generating or retaining a substantial number of jobs
  8. 8. 3. Jobs (Grow) or Generate Specific Taxes (ERG) ERG: • Is your project going to generate specific types of taxes that you may be able to have pledged to help to make your project possible? • (ERG is a form of “Tax Increment Financing”)
  9. 9. 4. Tax Credits issued under Grow or ERG Grow NJ and ERG: • Transfer of Tax Credits may well be necessary • For Grow NJ and for the residential tax credits authorized under ERG, businesses who are not able to use the tax credits themselves must learn the process of transferring credits, and become familiar with the market of transferees
  10. 10. 5. If your project is residential, stay tuned ERG Tax Credits: • EO 2013 requires that the applicant must complete project and submit TCO no later than July 28, 2015 • Legislative Amendments are anticipated to move that date to 2018 • (Grow NJ is a program to attract Jobs; Residential –limited typically)
  11. 11. Location, Location, Location • A statute that will help implement State Plan • A statute that will help redevelopment
  12. 12. Location, Location, Location/Grow While the amount of the tax credits under Grow NJ does increase if the nature of the jobs attract certain kinds of development (transit oriented) or certain types of jobs (for example, technology or manufacturing), the most significant credits are available in specific places where it is often challenging to develop or redevelop
  13. 13. Location, Location, Location/Grow For example, if you are willing to bring 250 jobs to, and invest $50 Million in, “a mega project” in an “urban transit hub” you could be entitled to: • Base amount of tax credits of $5000 per job for up to 10 years • Moreover, cap on project is highest in these areas – up to $350M for project in Camden
  14. 14. Location, Location, Location/Grow “urban transit hub” = • Camden • East Orange • Elizabeth • Hoboken • Jersey City • Newark • New Brunswick • Paterson • Trenton
  15. 15. Location, Location, Location/Grow Bring jobs to a “Garden State Growth Zone” municipality • Base amount of tax credits of $5,000/job for up to 10 years • Absolute cap on project in GSGZ = $300M
  16. 16. Location, Location, Location/Grow “Garden State Growth Zone” = • Paterson • Passaic • Trenton • Camden
  17. 17. Location, Location, Location/Grow Bring jobs to a project in an “urban transit hub municipality”: • Base amount of tax credits of $5,000/job for up to 10 years • Absolute cap on project in urban transit hub municipality = $100M
  18. 18. Location, Location, Location/Grow “urban transit hub municipality” = • Camden • East Orange • Elizabeth • Hoboken • Jersey City • Newark • New Brunswick • Paterson • Trenton • Bridgeton • Mount Holly • Salem • West New York
  19. 19. Location, Location, Location/Grow Bring jobs to a project in a “distressed municipality”: • Base amount of tax credits of $4,000/job for up to 10 years • Absolute cap on project in distressed municipality = $80M
  20. 20. Location, Location, Location/Grow “distressed municipality” = See list on EDA website • Municipalities such as: –Neptune –Orange –Phillipsburg
  21. 21. Location, Location, Location/Grow Bring jobs to a project in a location that is “a deep poverty pocket”: • you would be entitled to bonus tax credits of $1,500 per job
  22. 22. Location, Location, Location/Grow By comparison, the base amount of credits in other areas that are “eligible,” but perhaps not viewed as much in need of assistance: • Base amount of tax credit is $500 per job • Absolute Cap = $25M • Amount of credits could be further limited to 90% of the withholding taxes generated by the business at that location
  23. 23. Location, Location, Location/ERG If you are willing to undertake a “redevelopment project”: • not only “projects located in areas determined to be in need of redevelopment” • also could be “any work or undertaking in accordance with Redevelopment Area Bond Financing Law” • also could be “any work or undertaking “pursuant to a redevelopment plan adopted by a State Entity” such as NJ HMDC, NJ Sports & Expos Auth, Fort Mon Econ Revitaliz Auth you can seek to recapture certain taxes to be generated by the project
  24. 24. Location, Location, Location/ERG The percentage of total project costs that can be funded with incremental taxes, providing assistance to make a tough project feasible, is greater in the locations where the Legislature seeks to attract development (for example, in Garden State Grow Zone municipalities)
  25. 25. Location, Location, Location/ERG As for residential ERG projects, most of the $600 Million of tax credits authorized for such projects is earmarked for specific locations.
  26. 26. Location, Location, Location/ERG (a) $250,000,000 shall be restricted to qualified residential projects within following counties • Atlantic • Burlington • Camden • Cape May • Cumberland • Gloucester • Ocean • Salem
  27. 27. Location, Location, Location/ERG (b) $250,000,000 shall be restricted to qualified residential projects located in: –(i) urban transit hubs that are commuter rail in nature, –(ii) a Garden State Growth Zone not located in a county mentioned in subparagraph (a) of this paragraph, –(iii) disaster recovery projects….
  28. 28. Location, Location, Location/ERG –(iv) Municipality in which a Schools Development Authority district is located in Hudson County that were awarded State Aid in State Fiscal Year 2013 through the Transitional Aid to Localities program
  29. 29. Location, Location, Location/ERG (c) $75,000,000 shall be restricted to qualified residential projects in –(i) distressed municipalities –(ii) deep poverty pockets –(iii) highlands development credit receiving areas or redevelopment areas
  30. 30. Location, Location, Location/ERG (d) $25,000,000 shall be restricted to qualified residential projects that are located within a qualifying economic redevelopment and growth grant incentive area
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