Residential real estate developers are playing a key role behind the push to pump another $1 billion in incentives into the Urban Transit Hub tax credit program, according to people familiar with the process.
“The one question I have (of this bill) is how much of the added tax credits will go to residential development, since the majority of the approved credits are going to commercial,” said George Vallone, president of Hoboken Brownstone Co. and builder vice president of the New Jersey Builders Association. Adding more tax credits “is a great idea, but I hope the new credits will be allocated to urban multifamily developments — which our cities could use.”
According to state Sen. Raymond J. Lesniak (D-Union), a co-sponsor of the bill, demand for tax credits under the program has come equally from residential and commercial developers, owners and tenants — but Newark has been aggressive about residential development, with two of its six approved projects containing a residential component. According to Lesniak, the Economic Development Authority, which administers the program, has expressed interest in allocating more tax credits to such projects.
The bill to expand the program was introduced Monday, and would set aside another $200 million for the Grow New Jersey assistance program, which is targeted toward development projects in select industries in territories outside the nine cities eligible for Urban Transit Hub incentives.
It’s unclear how much of the $1.5 billion is left to be awarded under the program, but that was the subject of a fiscal analysis requested last month by Alfred C. Koeppe, chairman of the EDA’s board. The agency is expected to discuss the findings of the study at its Feb. 14 meeting.
To date, there are 15 active projects that have been approved for $916 million in tax credits under the program, according to the EDA. Only 40 percent of those approved projects are residential.
Whether demand for the program requires another $1 billion in tax credits remains to be seen, “but clearly what we’ve seen in the last two years is that there’s been extraordinary demand up until now,” Koeppe said Wednesday.
“What we’ll learn next week is what’s in the pipeline today,” he said. “Then I think we’ll see what occurs after that.”
Koeppe said he was confident the EDA could handle administering an additional $1 billion under the program, as the agency has “the rules and procedures in place to have the highest standard that you can apply on these issues.”
“They know this drill, and they do it well,” he said of the EDA’s business staff. “We’ve handled these things before, and the board is pretty astute on this, as well.”
According to Jay Biggins, executive managing director of Biggins, Lacy, Shapiro & Co., a Princeton-based site selection and incentives advisory firm, the program had “a slow start” but has since “emerged as a successful competitive tool.”
“A key to its success is that it is so rigorously managed by EDA, such that the state is always assured a positive return on its investment, while also getting cranes in the air,” Biggins said in a statement. “Ideally, the (Chris Christie) administration will be able to continue investing in an improved business climate while preserving the firepower to compete project by project — both will increase employment and revenue in the long run.”