The Aspire Program, which is the cornerstone of the New Jersey Economic Recovery Act of 2020 (ERA), is now open for business...
The Aspire Program, which is the cornerstone of the New Jersey Economic Recovery Act of 2020 (ERA), is now open for business. The New Jersey Economic Development Agency (NJEDA) began accepting applications on January 19, 2022.
“The Aspire program will help to advance new housing and commercial development projects throughout the state, with a focus on communities that have long been overlooked,” Governor Phil Murphy said in a press statement. “New Jersey’s economy is rebounding, and housing is in high demand. Our Administration has long prioritized transit-oriented development, affordable housing, and other projects of public interest, and we will continue to do so under the Aspire program.”
Tax Incentives Under the Aspire Program
The Aspire program supports mixed-use, transit-oriented development by providing tax credits to commercial and residential real estate development projects that have financing gaps. The amount of tax credits a project is eligible to receive is a percentage of the project’s eligible costs, subject to a cap that is determined by the project’s location, other financing available, and other aspects of the project.
Individual award amounts for Aspire will be capped at $42 million for most projects and $60 million for certain projects in targeted areas or those utilizing tax credits under the federal Low-Income Housing Tax Credit Program. Individual project awards are capped at 45 percent of development costs for most projects, 50 percent of development costs for commercial projects in targeted areas, and 60 percent for new construction projects utilizing tax credits under the federal Low-Income Housing Tax Credit Program.
Projects that meet certain parameters can qualify as “transformative projects,” which may receive tax credits up to $350 million. To be designated as a transformative project, a project must have a minimum investment of $100 million and include renovation or construction of more than 500,000 square feet of commercial or residential space, or 250,000 square feet of film production space; and for residential projects, contain minimum unit numbers depending on the location.
The NJEDA’s Aspire Mapping Assistant is available to help potential applicants determine if proposed projects may be eligible to participate in the Aspire Program, including whether they may qualify as “Transformative Projects.”
Eligibility for the Aspire Program
To be eligible for tax credits under the Aspire Program, a redevelopment project must:
Demonstrate through NJEDA analysis that without the incentive award, the redevelopment project is not economically feasible;
Demonstrate that a project financing gap exists and/or the redevelopment project will generate a below-market rate of return;
Be located in a designated “incentive area,” which may include: Planning Area 1, Aviation District, Port District, or Planning Area 2 or other Designated Center that is within a half-mile of a rail transit station or a high-frequency bus stop. Film production projects may be located anywhere in the State.
Include a developer who has an equity participation of at least 10 percent of the total cost in limited instances and at least 20 percent of the total cost for the majority of Aspire projects; and
Result in a net positive economic benefit to the State for commercial projects.
Projects must also meet minimum size and cost thresholds. Commercial projects must include at least 100,000 square feet of retail or commercial space. Residential projects must have eligible project costs totaling $5 million to $17.5 million depending on location.
Additionally, the developer of a project seeking Aspire program tax credits must be in substantial good standing with the New Jersey Department of Labor and Workforce Development (DOL), the New Jersey Department of Environmental Protection (DEP), and the Department of the Treasury. Projects must also comply with environmental laws (including flood hazard requirements), meet green building requirements, and pay prevailing wages to construction workers and building service workers.
Applying for the Aspire Program
As part of the application for projects, applicants must provide a letter of support from the governing body of the municipality or municipalities in which the project is located and projects with an eligible project cost equaling or exceeding $10 million must also enter into a Community Benefits Agreement with the Authority and municipality or county in which the project is located.
The NJEDA advises that applicants consult with Aspire program staff prior to beginning work on an application “because completing the application will require focused time and attention on the applicant’s part; because Aspire program eligibility rules are nuanced; and because application fees are non-refundable.” We also recommend that developers work with an experienced attorney who can guide you through the process and help ensure that your project is successful.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact Don Pepe, Ashley Brinn, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
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