Gov. Phil Murphy today signed into law a bill establishing the “Next New Jersey” tax credit incentive program for manufacturing businesses creating at least 20 new full-time jobs and making a capital investment of at least $10 million at a New Jersey facility. The award amount to an eligible business will be equal to the lesser of: (1) 0.1 percent of the eligible business’s total capital investment, multiplied by the number of new full-time jobs; (2) 25 percent of the eligible business’s total capital investment; or (3) $150 million, and the New Jersey Economic Development Authority (“EDA”) is authorized to also issue “bonus credit awards.”Continue Reading Breaking News: Powerful New Tax Credit Incentive for Manufacturers Investing & Creating Jobs in NJ

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.Continue Reading Breaking News from Trenton: State Incentive Tax Credits Now Have a “Buyer of Last Resort”

Governor Murphy today signed Senate Bill 1323/Assembly Bill 2076, the long-awaited legislation correcting many of the impediments holding-back the use of “NJ Aspire” – a potentially powerful financial incentive that was designed to address project financing gaps through the awarding of transferable, pledgeable state tax credits to eligible proposed redevelopment projects.

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In our previous summary of the Aspire legislation approved by both houses of the State Legislature two weeks ago and now awaiting Governor Murphy’s enactment into law (click here to view the summary of Aspire 3.0), we noted the following with respect to the usability of Aspire tax credits:

State Buyback of Tax Credits: The Aspire tax credits are only usable against the Corporate Business Tax and insurance premium taxes. Should a project redeveloper be unable to use directly or sell its credits, the State Treasury will have the discretion to purchase such credits at a floor of 0.85 cents per dollar. (Note that many of the bills’ sponsors will be introducing legislation early in the new year that would obligate the State Treasury to be the “buyer of last resort” for unutilized credits—a step that would provide the certainty and predictability that many equity investors and debt financiers give considerable weight (if not require) in the course of the underwriting process.)Continue Reading Update on NJ Aspire 3.0

Redevelopers have always struggled to make the numbers work on their proposed projects due to the unique added expenses of redevelopment not typically encountered on “greenfield” new construction projects—costs of land assemblage, environmental remediation, and structured parking, to name a few. Project financing-gaps only widened during and following COVID, as inflation drove up the cost of labor and materials and the Federal Reserve launched a rapid series of interest rate hikes. Adding to the challenge, local incentives—specifically, long-term tax exemptions (PILOTs), even when coupled with redevelopment area bond (RAB) sale proceeds—have generally not been generous enough to make the numbers work.  As a result, even proposed redevelopment projects in tested, primary New Jersey cities have not always penciled-out.Continue Reading Breaking News: State Legislature Just Approved NJ Aspire 3.0