The New Jersey Economic Development Authority (NJEDA) recently approved regulations for the Historic Property Reinvestment Program...
The New Jersey Economic Development Authority (NJEDA) recently approved regulations for the Historic Property Reinvestment Program. The program, which was established under the New Jersey Economic Recovery Act of 2020 (ERA), aims to incentivize the rehabilitation of designated historic structures or structures in designated historic districts.
“If you drive around Trenton, Camden, Paterson, Newark, Jersey City and a number of other places, you’ll always see great old buildings that — with a little bit of extra love and investment — could be converted into something special: housing, retail, mixed-use or even spaces for innovation,” said NJEDA Chief Executive Officer Tim Sullivan.
Eligibility for Historic Property Reinvestment Program
To receive tax credits through the Historic Property Reinvestment Program, a project must:
Demonstrate that without the tax credit award, the rehabilitation project is not economically feasible.
Prove that a project financing gap exists, and the tax credit award being considered for the project is equal to or less than the project financing gap.
Not have commenced any construction or rehabilitation activity at the site of the rehabilitation project prior to submitting an application and will not commence any construction or rehabilitation activity until the execution of the Rehabilitation Agreement (with certain limited exceptions).
Include business entity contributed equity of at least 20 percent of the total project costs; or 10 percent of the total project costs, if located in a government-restricted municipality.
Meet minimum cost requirements where the cost of rehabilitation for the selected rehabilitation period cannot be less than the greater of the adjusted basis of the structure or $5,000.
For a residential project, the structure must serve a residential rental purpose and also contain at least four dwelling units.
Be a rehabilitation project.
A “rehabilitation project” is defined as a specific construction project or improvement or phase of a project or improvement undertaken by a business entity that includes the rehabilitation of a qualified property, or transformative property. Meanwhile, a “qualified property” is a property located in the State of New Jersey that is an income-producing property, and that is individually listed, or located in a district listed on the National Register of Historic Places, the New Jersey Register of Historic Places, or the Pinelands Commission; or individually identified or registered, or located in a district identified or registered, for protection as a significant historic resource by a municipality in accordance with criteria for identification or registration that has been approved by the State as suitable for substantially achieving the purpose of preserving and rehabilitating buildings of historic significance within the jurisdiction of the municipality.
A “transformative project” is defined as a property located in the State of New Jersey that is an income-producing property, and that is:
An income-producing property, not including residential, whose rehabilitation the Authority determines will generate a substantial increase in State revenues through the creation of increased business activity within the surrounding areas
Individually listed on the New Jersey Register of Historic Places
Received a Determination of Eligibility from the Keeper of the National Register of Historic Places
Located within a one-half mile radius of the center point of a transit village, as designated by the NJDOT and within a city of the first class, OR located within certain municipalities
Available Tax Incentives Under Historic Property Reinvestment Program
Under the Historic Property Reinvestment Program, most eligible projects can receive tax credits worth up to 40 percent of eligible costs, with a maximum of $4 million for eligible properties. Projects located within a qualified incentive tract or in qualified municipalities can receive tax credits worth up to 45 percent of eligible project costs, with a maximum of $8 million for qualified properties.
Also, transformative projects can receive tax credits worth up to 45 percent of eligible project costs, with a maximum of $50 million. The HPRP is subject to an annual program cap of $50 million for a total of $300 million for a period of six years.
What’s Next?
Applications are currently under development, and the NJEDA plans to be ready to accept applications in March. If you have questions about how you may be able to benefit from the Historic Property Reinvestment Program or how to best pursue the redevelopment of historic properties in New Jersey, we encourage you to contact a member of Scarinci Hollenbeck’s Land Use Practice Group.
If you have any questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, William C. Sullivan, Jr., at 201-896-4100.
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