Theodore A. Schwartz
Partner
201-896-7190 tschwartz@sh-law.comAuthor: Theodore A. Schwartz|December 18, 2020
After months of negotiation, Gov. Phil Murphy and leaders in both houses of the New Jersey Legislature have reached a deal on new tax incentive programs. The “New Jersey Economic Recovery Act of 2020” establishes a wide range of programs that could total $11.5 billion over six years. Together, they aim to spur New Jersey’s economic recovery in the wake of the COVID-19 pandemic and position the State to attract businesses in the years to follow.
Introduced on December 16, 2020, the 137-page New Jersey Economic Recovery Act of 2020 (Senate Bill 3295/ Assembly Bill 4) contains a mix of new and previously expired incentive programs. As Gov. Murphy highlighted in response to questions about the speed at which the legislation is being considered, many of the new programs reflect proposals that the Murphy Administration previously introduced about a year ago.
Below is a brief summary of the key provisions of the legislation:
The combined value of all tax credits awarded under the New Jersey Economic Recovery Act of 2020 would be subject to an overall cap of $11.5 billion over a six-year period. Of this $11.5 billion, $2.5 billion would be reserved for “transformative projects” approved under the Aspire Program or the Emerge Program. The legislation also establishes the following annual limitations for the programs.
The program aims to significantly increase the amount of venture capital investment available in New Jersey by auctioning off tax credits to existing businesses and then using the funds raised to make investments in New Jersey-based startups. Money generated by auctioning off the tax credits would be deposited into the Evergreen Fund, along with matching funds from venture capital (VC) firms. The State and the VCs would then invest jointly in New Jersey-based startups, with the Evergreen Fund receiving the proceeds from startup exit events, such as initial public offerings and acquisitions. Those proceeds would then be primarily used for reinvestment. Startups that receive funding must maintain their operations in New Jersey. In addition, businesses that receive tax credits must commit to providing mentorship, networking, and collaboration opportunities to startups that receive funding under the program.
The New Jersey Economic Recovery Act of 2020 is quickly making its way through both houses of the New Jersey Legislature. Full floor sessions in both chambers are scheduled for December 21, 2020, and we anticipate that a vote will be held on Senate Bill 3295 and Assembly Bill 4. Assuming the legislation is approved and signed into law, many details of the programs will still need to be finalized. The attorneys of Scarinci Hollenbeck will continue to provide updates regarding the status of the tax incentive programs and encourage you to contact us with any questions.
If you have any questions or if you would like to discuss the matter further, please contact me, Ted Schwartz, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Partner
201-896-7190 tschwartz@sh-law.comAfter months of negotiation, Gov. Phil Murphy and leaders in both houses of the New Jersey Legislature have reached a deal on new tax incentive programs. The “New Jersey Economic Recovery Act of 2020” establishes a wide range of programs that could total $11.5 billion over six years. Together, they aim to spur New Jersey’s economic recovery in the wake of the COVID-19 pandemic and position the State to attract businesses in the years to follow.
Introduced on December 16, 2020, the 137-page New Jersey Economic Recovery Act of 2020 (Senate Bill 3295/ Assembly Bill 4) contains a mix of new and previously expired incentive programs. As Gov. Murphy highlighted in response to questions about the speed at which the legislation is being considered, many of the new programs reflect proposals that the Murphy Administration previously introduced about a year ago.
Below is a brief summary of the key provisions of the legislation:
The combined value of all tax credits awarded under the New Jersey Economic Recovery Act of 2020 would be subject to an overall cap of $11.5 billion over a six-year period. Of this $11.5 billion, $2.5 billion would be reserved for “transformative projects” approved under the Aspire Program or the Emerge Program. The legislation also establishes the following annual limitations for the programs.
The program aims to significantly increase the amount of venture capital investment available in New Jersey by auctioning off tax credits to existing businesses and then using the funds raised to make investments in New Jersey-based startups. Money generated by auctioning off the tax credits would be deposited into the Evergreen Fund, along with matching funds from venture capital (VC) firms. The State and the VCs would then invest jointly in New Jersey-based startups, with the Evergreen Fund receiving the proceeds from startup exit events, such as initial public offerings and acquisitions. Those proceeds would then be primarily used for reinvestment. Startups that receive funding must maintain their operations in New Jersey. In addition, businesses that receive tax credits must commit to providing mentorship, networking, and collaboration opportunities to startups that receive funding under the program.
The New Jersey Economic Recovery Act of 2020 is quickly making its way through both houses of the New Jersey Legislature. Full floor sessions in both chambers are scheduled for December 21, 2020, and we anticipate that a vote will be held on Senate Bill 3295 and Assembly Bill 4. Assuming the legislation is approved and signed into law, many details of the programs will still need to be finalized. The attorneys of Scarinci Hollenbeck will continue to provide updates regarding the status of the tax incentive programs and encourage you to contact us with any questions.
If you have any questions or if you would like to discuss the matter further, please contact me, Ted Schwartz, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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