Analysis of The New Jersey Economic Recovery Act of 2020
On January 7, 2021, Governor Phil Murphy signed the much anticipated New Jersey Economic Recovery Act of 2020, a comprehensive economic recovery plan that will provide new development tools and incentive programs intended to spur the State economy in the aftermath of the COVID-19 pandemic.
Through the establishment of a series of new and reformed programs to be administered by the New Jersey Economic Development Authority (EDA), including new iterations of the Grow New Jersey Program (GrowNJ) and the Economic Redevelopment and Growth Grant Program (ERG), the New Jersey Economic Recovery Act of 2020 is expected to address job creation and retention, property development, food desert relief, community partnerships, small and early-stage businesses, renewable energy, and film production. Most notably, the programs summarized below will target socioeconomically disadvantaged areas throughout the State, many of which have suffered significant economic losses during the COVID-19 pandemic.
Historic Property Reinvestment Act. The Historic Property program will provide an award of tax credits for the rehabilitation of qualified properties or transformative projects. Successful applicants will receive tax credits of up to 40 percent of rehabilitation costs paid by the applicant business entity.
Brownfields Redevelopment Incentive Act. The Brownfields program will compensate developers of redevelopment projects located on brownfield sites for remediation costs. Awardees will receive tax credits of an amount up to the lesser of (i) 40 percent of actual rehabilitation costs, (ii) 40 percent of projected remediation costs, or (iii) $4 million.
Innovation Evergreen Act. Under the Evergreen program, EDA will invest in innovation as a catalyst for economic growth with the goal of advancing the competitiveness of the State’s businesses in the global economy. The program allows the EDA to auction up to $300,000,000 in tax credits, with the proceeds to be deposited into the New Jersey Innovation Evergreen Fund and awarded to qualified venture firms making qualified investments of capital in qualified businesses.
Food Desert Relief Act. The Food Desert program will address food poverty in distressed communities. The program will provide financial assistance to supermarkets, grocery stores, mid-sized food retailers and small food retailers to establish and retain locations in food desert communities in order to provide a consistent, and easily accessible, source of fresh produce to residents in those communities. Food retailers will be directly awarded tax credits of 20 or 40 percent of the total project cost or can secure a grant or loan that is funded through the sale of tax credits.
Community Anchored Development Act. Under the Community Anchored Institution program, EDA will facilitate, in partnership with key not-for-profit and governmental anchor institutions, large-scale development projects with desirable employment and geographical characteristics that are to impact a broader community. The program will provide a minimum of $5 million in tax credits to eligible projects. Additional analysis is provided here.
Aspire Program Act (Aspire). Like its predecessor ERG program, Aspire will encourage redevelopment projects through the provision of incentive awards to reimburse developers for project financing gap costs. The competitive program provides up to $50,000,000 in tax credits for redevelopment projects located in certain distressed communities, or up to $32,000,000 for all other redevelopment projects. For transformative projects, a developer may be eligible for a maximum of $250,000,000 in tax credits to address project financing gaps. Additional analysis is provided here.
Emerge Program Act (Emerge). Emerge, which succeeds GrowNJ, aims to encourage economic development, job creation, and retention of jobs in imminent danger of leaving the State. To that end, the program will provide tax credits of $500 to $4,000 per year for each new or retained full-time job created by an eligible business, depending on the location and type of the business, and subject to certain bonus allocations. Additionally, funds remitted by the eligible businesses will be deposited into the State’s Recovery Infrastructure Fund, which will be used to fund local infrastructure projects.
Main Street Recovery Finance Program Act (Main Street Program). The Main Street Program will provide financial assistance to eligible small businesses in communities that have been severely impacted by the COVID-19 pandemic. Under the program, eligible small businesses are awarded grants, loans and/or loan guarantees to help pay for capital improvements or cover daily operating expenses.
New Jersey Ignite Act (Ignite). The purpose of Ignite is to foster early stage innovation economy businesses and to help those businesses overcome barriers to commercial success. The program will provide start-up rent grants of up to $25,000 for early stage businesses to secure collaborative workspaces.