COURT HOUSE - The Cape May County Chamber of Commerce, in partnership with the Greater Atlantic City Chamber, presented a webinar on the $14.5 billion New Jersey Economic Recovery Act of 2020, signed by Gov. Phil Murphy Jan. 7.
The 249-page legislation contains several new programs intended to incentivize business development and job creation in the Garden State.
The programs replace the Grow New Jersey and Economic Revitalization and Growth programs, which expired July 1, 2019.
The tax incentive-based legislation provides a series of programs aimed at the creation and retention of jobs, small business help, and property development.
The discussion was presented by Nicholas Talvacchia and Rebecca Lafferty, two attorneys with Cooper Levenson.
Two of the programs received most of the attention in the webinar.
New Jersey Emerge focuses on creating and retaining jobs, especially those that are in danger of leaving the state.
The program targets high-growth industries and comes with requirements related to affirmative action, prevailing wage, and environmental actions.
The program is subject to a net benefit analysis that demonstrates value to the state.
New Jersey Aspire aims at providing gap financing for real estate development projects that would not be economically feasible without state aid.
The program has links to the state redevelopment plan, which defines the projects most important to New Jersey. Aspire is subject to location restrictions, a clear demonstration of gap financing needs, and reconciliation requirements, with a payback of portions of the state funding if the project over-performs.
Unlike previous programs, the new law is based on tax credits, not the rebate of sales tax. The rate of return analysis for Aspire funding may also lead to rejection of the application if the project is deemed to have too low a return rate, even with added state funding.
In most cases, the tax credits are limited to 45% of project costs up to a maximum of $32 million, but there are exceptions. If the tax credits are more than the taxes that can be offset, they can be sold to companies that can use them. The sale results in a discount. Talvacchia said the current market is likely to be 92 cents on the dollar.
Lafferty mentioned other opportunities in the Economic Recovery Act, including the Historic Property Reinvestment Act, aimed at the rehabilitation of historic properties; the Brownfields Redevelopment Incentive Program Act targeting remediation costs for developments on brownfield properties; the Food Desert Relief Act providing incentives to establish food markets in food desert areas; the New Jersey Innovation Evergreen Act to support venture funding for innovation as an engine of economic growth; the New Jersey Ignite Act with start-up rent assistance at collaborative workspaces; and the Main Street Recovery Finance Act with loans and grants for small businesses.
The New Jersey Economic Recovery Act also creates the Office of the Economic Development Inspector General for oversight of the programs.
New Jersey Economic Development Authority Chief Executive Officer Tim Sullivan said, “The New Jersey Economic Recovery Act of 2020 presents a strong recovery and reform package that will position New Jersey to build a stronger and fairer economy that invests in innovation, in our communities, and in our small businesses the right way, with the protections and oversight taxpayers deserve.”
Wildwood Mayor Peter Byron praised the bill in a statement, saying it is “certain to make New Jersey a leader in attracting new businesses to our state, as well as assisting the recovery and growth of our existing small businesses.”
Given the economic devastation caused by the pandemic, Byron said the “legislation cannot come at a more critical time for our local communities.”
The webinar covered a wealth of detail related to the act and is available for viewing on YouTube (https://bit.ly/3dYsdoL).
To contact Vince Conti, email email@example.com.