September 18, 2013
By Gina Giordano
The Economic Opportunity Act of 2013 is aptly named, as it is expected to make New Jersey a competitor in both the national and global economy. The Act represents a long awaited modernization of New Jersey’s incentive programs that will allow New Jersey to attract jobs and capital investments.
The act will consolidate five of New Jersey’s economic incentive programs for businesses into two -- the Grow New Jersey (“Grow NJ”) Assistance Program and the Economic Redevelopment and Growth Grant Program (“ERGG”). The Business Retention and Relocation Assistance Grant, the Business Employment Incentive and the Urban Transit Hub Tax Credit programs will be phased out. The two remaining programs will be enhanced by extending incentive eligibility to greater geographical boundaries within New Jersey and by lowering the programs' eligibility thresholds.
The act is slated to provide tax credits to eligible businesses for an eligibility period not to exceed ten years. The Grow NJ tax credit, ranging from $500 to $5,000 per job, is mainly tied to the number of jobs created or retained by the project and to the location of the project. A project must meet minimum capital investment and jobs-created or jobs-retained thresholds in order to be eligible for the tax credit. However, for projects located in Garden State Growth Zones and in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties, these thresholds are reduced. The minimum capital investment required is reduced by one-third in these areas, and the minimum number of new or retained full-time jobs required is reduced by one-quarter in these areas. A Garden State Growth Zone means the four New Jersey cities with the lowest median family income based on the 2009 American Community Survey from the U.S. Census.
The ERGG additionally creates a redevelopment incentive of up to 40% of a developer’s total project costs for a project located in a Garden State Growth Zone (as opposed to 30% for a project located outside of this zone). For those qualified residential projects that have already applied for the Urban Transit Hub Tax Credit, a tax credit of up to 35% of their capital investment or up to 40% of the capital investment for projects in a Garden State Growth Zone can be received. The definition of what constitutes a capital investment, in a Garden State Growth Zone, is expanded to include any and all redevelopment and relocation costs such as site acquisition (if made within 24 months of application to the authority); engineering, legal, accounting and other professional services; and relocation, environmental remediation and infrastructure improvements for the project area, such as on and off site utility, road, pier, wharf, bulkhead, or sidewalk construction or repair.
The tax credit will apply dollar for dollar against certain tax liabilities, including the corporation business tax and the premiums tax on domestic and foreign insurers. It can also be transferred, in lieu of the business being allowed a credit against its tax liability. It may be sold or assigned, either fully or partially (typically in an amount not less than $100,000), to any other person that may have certain tax liabilities.
Businesses must apply for the tax credit. The Act would sunset both Grow NJ and ERGG on July 1, 2019, meaning that applications should be submitted on or before June 30, 2019.