A bill sponsored by Assemblymen Albert Coutinho and Louis Greenwald to help stimulate job creation and development investments in urban areas by expanding the eligibility requirements for various tax credits has been signed into law.
“Without solid incentives to invest in New Jersey, our economy will continue to stagnate,” said Coutinho (D-Essex/Union). “This law will incentivize developers to invest in our communities that need it most and create jobs for residents who are dying to get back to work. This law is pro-worker, pro-business and pro-community. It’s a win-win-win for everyone.”
The new law enhances various programs created under the Economic Stimulus Act of 2009. The original law was sponsored by Coutinho and is considered to be the most aggressive investment incentive package in the nation at the time.
Currently, under the Urban Transit Hub Tax Credit Act (UTHTCA), a business may receive tax credits of up to 100 percent of its qualified capital investment in a business facility that is located in an urban transit hub, and employees at least 250 people at the facility. Annually, for ten years, the business may apply a credit equal to 10 percent of the amount of the investment against certain business-related state tax liability.
Under a separate but similar UTHTCA program, a developer may receive tax credits of up to 20 percent of its capital investment in a qualified residential project located in an urban transit hub.
Both business and residential projects are subject to the same $50 million project investment requirement in order to be eligible for the tax credits.
“This is about spurring investments in a shaky economy and putting people back to work,” said Greenwald (D-Camden). “This law sends a message to investors that we are not going to sit idly by and pray for our economy to revive itself. Instead, we’re providing the tools to make it happen.”
The new law (S-2972/A-4161), however, will extend eligibility for these credits to participants in a mixed-use project comprising both a business facility and a residential development, neither of which by itself satisfies the total investment minimum of $50 million, so long as the investment in the component of the mixed use project for which the participant seeks credit amounts to at least $17.5 million, and the total amount invested in the project as a whole is at least $50 million. A project’s business component must also employ 250 full-time employees to qualify.
The law changes the way credits under the UTHTCA are treated by eligible businesses by allowing companies receiving tax credits to carry forward allowable credits for up to 20 tax accounting periods and limits the value of the credit in any given year to $150 million.
The law also increases the size of the tax credit for residential UTHTCA projects from a maximum of 20 percent to 35 percent of the total capital investment in a qualifying project. Newly eligible mixed use projects will also be eligible for 35 percent of the capital invested in a qualifying project under the law.
The law also amends the “New Jersey Economic Stimulus Act of 2009” to expand the definition of a “qualifying economic redevelopment and growth grant incentive area” to include an area zoned for development pursuant to a master plan or subject to a redevelopment plan adopted by the New Jersey Meadowlands Commission and any land owned by the New Jersey Sports and Exposition Authority within the boundaries of the Hackensack Meadowlands District, thereby making projects within these areas eligible for incentive grants under the Economic Redevelopment and Growth (ERG) Grant program established by the act.
The ERG program is an incentive grant program that allows municipalities and/or the state to provide grant funding for redevelopment projects. The grant can be no more than 20 percent of the total cost of the redevelopment. The grant may provide up to 75 percent of the annual incremental state and/or local tax revenue for a period of up to 20 years.