The New Jersey Economic Development Authority will be rolling out applications for a key tax break program in the landmark, $14.5 billion economic incentive package Gov. Phil Murphy approved in January.
That program, called the Economic Redevelopment and Growth incentive, is geared toward enticing residential redevelopment by covering the gap between existing financing for developers and the total price tag for the project.
It was launched in 2013 as part of a broader set of incentives meant to drag the state out of the Great Recession.
Yet the program expired and stopped accepting applications in 2019, amid intense public scrutiny over the efficacy of the incentives and an accompanying multibillion-dollar corporate tax break program, and allegations of improperly awarded incentive packages to politically-connected businesses.
The newly-minted “New Jersey Economic Recovery Act of 2020” is aiming to assist the state out of the COVID-19 recession, triggered by mass business closures, cratering consumer spending and soaring unemployment.
This new round of incentives is for the residential component of the ERG program and entails a $50 million pot of money. Applications go live on June 1.
ERG is getting a $220 million infusion, and over the years state financing has gone toward mixed-use and commercial projects including the American Dream Mall in East Rutherford, Tropicana in Atlantic City and the New Brunswick Performing Arts Center in its namesake city, according to public records. The largest-ever ERG award was 2011’s $261 million to kickstart the Revel Casino Hotel in Atlantic City, but that project fell through and instead opened in June 2018 as the Ocean Casino Resort.
“The extension of the residential portion of the ERG Program will support investment in projects that offer attractive housing options for families while revitalizing surrounding neighborhoods,” Tim Sullivan, who heads the NJEDA, said in a March 2 statement.
Under the extension, tax credits will cover up to 30% of certain project costs, or up to 40% for projects in the state’s poorest cities: Atlantic City, Camden, Paterson, Passaic and Trenton. The incentives cannot be used to cover debt and equity financing, the NJEDA said.
ERG is set to be replaced by NJ Aspire under the ERA, capped at $1.1 billion a year. The $50 million, Sullivan said, will help kickstart projects “that are ready to move forward now” while the state hashes out the specifics of Aspire and several other key incentive programs, like corporate tax breaks and a state-run venture capital fund.