Late last night Governor Murphy signed legislation into law requiring the State Treasury to buy back developers’ unused tax credits under the NJEDA’s Aspire, Film & Digital Media Tax Credit, and CAFE incentive programs. Under this new law, a tax credit recipient under any of these three programs has the absolute right to redeem unused tax credits to the State Treasury for cash if those credits remain unsold for longer than one year after their date of issuance. Although most developers have been able to sell their tax credits in the private markets (typically above 90 cents on the dollar), this new requirement will provide a much-needed backstop; banks contemplating making a bridge loan or construction loan against tax credit awards issued under any of these programs will now be assured that the tax credits can ultimately be monetized at the State Treasury and that they will be purchased at a certain price (85 cents for Aspire and CAFE tax credits, and at 95 cents for Film & Digital Media tax credits), thereby providing a reliable floor for budgeting purposes.

We will continue to monitor this new feature as the State Treasury proposes and adopts regulations to implement the redemption process. Please feel free to check back on this law blog for updates.