New Jersey Economic Opportunity Act Will Consolidate Economic Development Incentives
The NJ State Assembly recently passed the New Jersey Economic Opportunity Act of 2013. This Act merges five economic development incentives into two distinct programs administered by the NJ Economic Development Authority (EDA). By enhancing “the ability of the state to attract and retain businesses,” this new bill facilitates the creation of thousands of new jobs over the next few years.
The five incentives affected by the Economic Opportunity Act are (1) the Business Retention and Relocation Assistance Grant Program, (2) the Business Employment Incentive Program, (3) the Urban Transit Hub Tax Credit Program, (4) the Grow New Jersey Assistance Program (GROWNJ), and (5) the Economic Development and Growth Grant Program (ERGG). More specifically, GROWNJ and ERGG are being expanded to incorporate the benefits of the above programs into a more streamlined process. The Act provides eligibility for these incentives over a greater geographic area within New Jersey and lowers the thresholds for meeting eligibility requirements. These measures allow for increased business capacity and, in effect, business expansion and job creation. For GROWNJ, the bill also contains a “bonus award tax credit” for those businesses seeking to develop in smart growth areas.
For ERGG, the Economic Opportunity Act designates it as the state’s only redeveloper incentive program. The provisions of the Act attempt to close project financing. One very important change to ERGG will be the addition of “tax credits” to developers of qualified residential projects. Under the existing ERGG law residential developments are effectively shut out from the program as residential developments generate little tax revenue. The proposed ERGG amendments will make available tax credits to address this issue. It remains to be seen if the ERGG will have any practical advantage for developers as it comes with the added cost of prevailing wage obligations. It is also unclear what the final version of the Act will look like, as it has been amended many times and still has to go through the Senate before it is passed for the Governor’s signature. Stay tuned.