January 5, 2012 - Red Bank, New Jersey- Legislation just signed into law by New Jersey Governor Chris Christie promises to provide corporate income tax credits to companies seeking to move to New Jersey or expand New Jersey-based operations based on capital investments and job creation and/or retention. The legislation creates the GrowNJ Assistance Program, which is a $200 million tax credit incentive program administered by the New Jersey Economic Development Authority (NJEDA).
The GrowNJ Assistance Program is intended to provide property owners, tenants and utilities located in certain geographic areas of New Jersey not currently eligible for the Urban Transit Hub Tax Credit with a similar business incentive program. The general terms of the GrowNJ Assistance Program include the following:
- Businesses will be eligible for a GrowNJ tax credit if they retain 100 full-time jobs or create at least 100 full-time jobs in an NJEDA designated industry and also make a capital investment of at least $20 million in a Qualified Incentive Area.
- Retained full-time jobs eligible for a GrowNJ tax credit are any eligible positions that currently exist in New Jersey and are filled by a full-time employee but which, because of a potential relocation by the business, are at risk of being lost to another state or country.
- Qualified Incentive Areas qualifying for the GrowNJ tax credit include certain metropolitan, suburban, regional or town-designated centers under the State Development and Redevelopment Plan, certain areas zoned for development pursuant to certain master plans and redevelopment plans adopted by the New Jersey Meadowlands Commission, certain properties located in the Pinelands, certain properties located in the Highlands Region, federally-owned land approved for closure under any federal Base Closure and Realignment Commission action, and properties consisting of a vacant commercial building having over 400,000 square feet of office, laboratory or industrial space available for occupancy for a period of over one year or which is negatively impacted by approval by any tax credit granted under the Urban Transit Hub Tax Credit.
- Capital Investments qualifying for the GrowNJ tax credit must be incurred by an applicant after submission of an application to the NJEDA and include site preparation and construction, repair, renovation, improvement, equipping or furnishing of a building, structure, facility, or improvement to real property, and obtaining and installing furnishings and machinery, apparatus or equipment for the operation of a business in a building, structure, facility or improvement to real property.
- Eligible businesses will receive an annual tax credit of $5,000 to $8,000 for up to ten (10) years for each full time job created or retained.
- Businesses must apply for the tax credit prior to July 1, 2014 and must submit documentation evidencing their satisfaction of the employment and capital investment requirements to be specified in a Project Agreement to be entered into with the NJEDA for certification of its credit amount by no later than July 28, 2017.
- Any permitted tax credit may generally be applied against a corporate tax payer’s tax liability under the corporate business tax (CBT), the employer payroll tax and insurance premium tax.
- Credit amounts that are taken for a tax period of the business that exceed the final tax liabilities of the business for such tax period may be carried forward for use by the company in the next twenty (20) successive tax periods, provided that the value of all credits approved by the NJEDA against tax liabilities does not exceed $150 million and the combined value of all credits approved by the NJEDA does not exceed $1.5 billion.
Certain businesses that will not be permitted to obtain tax credits under the GrowNJ Assistance Program include the following:
- A business that has taken an Urban Transit Hub credit or credit under the NJ Business Employment Incentive Program Act or the Business Retention and Relocation Assistance Act for the same capital and employees that qualify the business for a GrowNJ tax credit.
- Any business that has received incentives authorized under the Municipal Rehabilitation and Economic Recovery Act.
- Any business that has received a grant pursuant to the Urban Transit Hub Tax Credit Act relating to the same capital investment and employment of full-time employees that would otherwise be the subject of an application for a tax credit under the GrowNJ Assistance Program.
- Point-of-final-purchase retail facilities.
Once an applicant has fulfilled the capital investment and employment requirements described above, the chief executive officer or equivalent officer of the business must submit a certification to the NJEDA indicating that existing jobs are at risk of leaving the State, that any projected creation of new full-time jobs would not occur but for the provision of tax credits under the GrowNJ Assistance Program, and that the information submitted to the NJEDA and the representations contained therein are accurate. Based on materials submitted, the State will review an applicant’s application and determine whether the capital investment resulting from the award of tax credits and the resulting retention and/or creation of eligible full-time positions will yield a net positive benefit to the State. The State will also generally take into account whether the award of tax credits will be a material factor in the business’ decision to create or retain the minimum number of full-time jobs for eligibility under the program. Certain other requirements contained in the Project Agreement between the NJEDA and the applicant will also need to be met. Applications involving intra-state job transfers also require additional information to be submitted by the business to the NJEDA in connection with the application.
Additionally, any business that is required to respond to a request for proposal and fulfill a contract with the federal government may be determined by the NJEDA as eligible for tax credits under the GrowNJ Assistance Program even though the chief executive officer or equivalent officer of the business has not demonstrated to the NJEDA that the award of tax credits will be a material factor in the business’ decision to retain at least 100 full-time jobs. In that event, the NJEDA may, in its discretion, consider the economic benefit of the retained jobs servicing the federal contract in conducting the benefit analysis described above.
The enacted law also makes certain changes to eligibility requirements under the Urban Transit Hub Tax Credit program, including the addition of medical facility sites, vacant hospital sites and federally-designated CHOICE neighborhoods within one (1) mile of a rail station in an Urban Transit Hub Tax Credit city.
This Update is not considered to be legal advice, and is intended for educational purposes only. For more information regarding the GrowNJ Assistance Program, please contact Patrick Convery (pconvery@ghclaw.com).
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