SENATE ECONOMIC GROWTH COMMITTEE
SENATE, No. 3033
with committee amendments
STATE OF NEW JERSEY
DATED: SEPTEMBER 19, 2011
The Senate Economic Growth Committee reports favorably Senate Bill No. 3033 with committee amendments.
This bill, as amended, establishes the Grow New Jersey Assistance Program (“program”) to provide certain eligible businesses with tax credits for creating a minimum of 100 new or retained full-time jobs as well as making capital investments of at least $20 million in certain incentive areas as designated in the bill.
Specifically, the amended bill establishes a $200 million tax credit incentive program that emphasizes growth of New Jersey-based companies through capital investment and job subsidies that incentivize both retained and new jobs. The program’s cost would fall under the $1.5 billion cap established under the “Urban Transit Hub Tax Credit” (“UTHTC”) program. The initial $200 million program allocation could be increased at the discretion of board of the New Jersey Economic Development Authority (“EDA”) if the board determines the credits to be reasonable, justifiable, and appropriate. All applications for eligibility under the program shall be made to the EDA by July 1, 2014.
Under the program, a minimum of $20 million in capital investment would be required to be spent at the project site, with owners, tenants, and affiliates allowed to participate in cost sharing to meet this eligibility requirement. “Green” building standards would need to be used in the design and construction of any eligible project that are based on the green building manual prepared by the Commissioner of Community Affairs pursuant to section 1 of P.L.2007, c.132 (C.52:27D-130.6). Areas of the State where program assistance would be available include: 1) Planning Area 1 (Metropolitan) and Planning Area 2 (Suburban) locations under the State Development and Redevelopment Plan; 2) former military bases closed under the federal Base Closure and Realignment law; 3) vacant commercial office, laboratory, or industrial properties having over 400,000 square feet for at least one year or impacted by UTHTC program approval; and 4) areas "targeted for development" in the New Jersey Meadowlands, Highlands, and Pinelands, as specified in the acts establishing these areas.
Under the program, an eligible business would receive a base tax credit of $5,000 per job, per year, for 10 years with no distinction between retained or new jobs. The tax credit term of 10 years includes an annual compliance review for credit issuance. Tax credits issued to an eligible business may be transferable. The base tax credit may be increased of an amount up to $3,000 per job by an eligible business that, as determined by the authority: 1) is an industry identified by the authority as desirable for the State to maintain; 2) relocates to a location adjacent to, or within walking distance or short-distance-shuttle service of, a public transit facility, as determined by the EDA, by regulation; 3) creates jobs using full-time employees whose annual salaries, according to the Department of Labor and Workforce Development, are greater than the salary of the average worker employed in this State; or 4) is negatively impacted by the approval of a “qualified business facility,” under the UTHTC program. The per project benefit shall not exceed the capital investment at the project site.
At the time of the application, the business’s CEO must certify that retained jobs are at risk of leaving the State. Additionally, in order to be eligible, a business shall demonstrate to the EDA, at the time of application, that the tax credits and resultant retention of full-time jobs and any capital investment will yield a “net positive benefit” to the State as that term is described in the bill.
Further, the program provides for performance requirement "claw backs" (i.e., forfeiting the amount of assistance received in any year) if a business receiving assistance under the program does not meet an 80 percent Statewide job maintenance and 15-year job maintenance requirements.
In addition, the amended bill: 1) amends the definition of “urban transit hub” under the UTHTC law to include eligibility for that tax credit assistance program any project commencing construction after the effective date of the bill that is located within a half mile radius of a New Jersey Transit Corporation rail station located at an international airport, except for any property owned or controlled by the Port Authority of New York and New Jersey, 2) clarify that an eligible business claiming a tax credit under the UTHTC program must first receive EDA certification, rather than approval, that the business met the capital investments and employment requirements prior to claiming the tax credits.
The committee amended the bill to clarify eligibility under the program, including: 1) adding definitions of “eligible position” and “retained full-time job” to the program and changing the definition of “qualified incentive area" to require vacant laboratory or industrial facilities be included with the criterion of property consisting of a vacant commercial building having over 400,000 square feet of office, available for occupancy for a period of over one year or is negatively impacted by UTHTC program approval; 2) regarding the bonus tax credit provision, that the criterion for receipt of the bonus credit be extended to a location within walking distance or short shuttle service, as determined by the EDA by regulation; 3) providing that projects consisting solely of point-of-final-purchase retail facilities shall not be eligible for tax credits under the program; 4) providing that a) the amount of tax credits available to be applied to the business annually shall not exceed one tenth of the capital investment and b) the number of new full-time jobs shall not exceed the number of retained full-time jobs; and 5) concerning capital investments made by a tenant, the amount capital investment in a facility that a leased area represents shall be equal to that percentage of the owner's total capital investment in the facility that the percentage of net leasable area leased by the tenant is of the total net leasable area of the qualified business facility.
In addition, the amendments make changes to the UTHTC law to clarify that an eligible business claiming a tax credit under the UTHTC program must first receive EDA certification, rather than approval, that the business met the capital investments and employment requirements prior to claiming the tax credits.
Further, the amendments make clarifying changes to the "Business Retention and Relocation Assistance Grant" (“BRRAG”) program to: 1) change the definition of “capital investment” to include under that definition that a business acquiring or leasing a qualified business facility as deemed to have acquired the capital investment made or acquired by the seller or landlord, as the case may be; and 2) repeals the requirement that tax credits issued under the BRRAG program may not be applied by the business against liability until the State Treasurer has certified that the amount of retained State tax revenue from the business for the tax period prior to the period in which the credits will be applied, equals or exceeds the amount of the tax credits.