Jan 8, 2020
Governor Murphy Signs New Jersey Economic Recovery Act of 2020 Including Tax Credit Incentives for Real Estate Development
On January 7, 2021, New Jersey Governor Phil Murphy signed the New Jersey Economic Recovery Act of 2020, which creates a seven-year, $14 billion dollar package of tax incentives for key businesses and development projects in the State (the “Act”). The Act will have a significant impact on residential, commercial, and industrial real estate markets in New Jersey due to the Act creating tax incentives for programs and policies related to property development. Notably, the Act establishes the Brownfields Redevelopment Incentive program, which “is designed to compensate developers of redevelopment projects located on brownfield sites for remediation costs.” Developers seeking a tax credit for a redevelopment project will be eligible for a tax credit if the developer demonstrates that, at the time of an application to the New Jersey Economic Development Authority, the redevelopment project is not economically feasible without the tax credit.
The Act also establishes the New Jersey Aspire program, administered through the New Jersey Economic Development Authority, to “encourage redevelopment projects through the provision of incentive awards to reimburse developers for certain project financing gap costs.” Eligible development projects would be located in specific “incentive areas” as defined by the State in order to receive an “incentive award” in the form of tax credits. With respect to commercial projects, the developer must submit a letter showing support from the governing body of the municipality in which the commercial project is located.
In addition, the Act establishes the Food Desert Relief program, to be administered by the New Jersey Economic Development Authority, to target not more than fifty (50) “separate geographic areas that are most in need of a supermarket or grocery store.” An application program will be established and developers that develop and open for business the first or second supermarket or grocery store in a designated food desert community or own and operate the first or second supermarket or grocery store in a designated food desert community may be eligible for the award of tax credits. Additional noteworthy programs created are: the Historic Property Reinvestment program, which will incentivize the restoration of historic buildings with a cap of $50 million in tax credits, annually, for six (6) years; the Community-Anchored Development program, which will incentivize the construction of innovative new developments by partnering with universities, hospitals, arts, and cultural organizations by providing $200 million annually in tax credits for six (6) years, with the $200 million annual cap split, so that up to $130 million will be provided in areas in the thirteen (13) northern counties of the State, and $70 million for areas in the eight (8) southern counties; and the Main Street Recovery Finance program, which will provide a direct $50 million appropriation for grants, loans, loan guarantees, and technical assistance to small and micro-businesses.
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