Now that Gov. Murphy Has Signed the Economic Recovery Act, What’s Next?

Now that Gov. Murphy Has Signed the Economic Recovery Act, What’s Next?

On January 7, 2021, New Jersey Gov. Phil Murphy signed the New Jersey Economic Recovery Act of 2020 into law...

On January 7, 2021, New Jersey Gov. Phil Murphy signed the New Jersey Economic Recovery Act of 2020 into law. The comprehensive economic incentives program is welcome news for the state’s business community, which continues to be impacted by the COVID-19 pandemic.

“These programs are the product of nearly three years of hard work, during which we received input from hundreds of voices on how best to structure our state’s recovery and growth,” Gov. Murphy said in a press statement. “I am immensely proud of the result, which will not only provide much-needed relief for our small businesses, but will also fundamentally change economic development in our state while creating thousands of high-paying jobs for our residents.”

New Jersey’s New Tax Incentive Programs

The New Jersey Economic Recovery Act of 2020 authorizes up to $11.5 billion in new economic development incentives over a seven-year period. The programs are designed to foster redevelopment, create jobs, and attract businesses to the state. Below is a brief description of the new programs established under the Economic Recovery Act:

• Historic Property Reinvestment Program: The program will provide tax credits for part of the cost of rehabilitating historic properties. Tax credits under this program are capped at $50 million annually for six years.
• Brownfields Redevelopment Incentive Program: The program will provide tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs. Tax credits under this program are capped at $50 million annually for six years
• New Jersey Innovation Evergreen Program: The program will auction off tax credits for cash and then use the funds to invest in New Jersey-based startups. Tax credits under this program are capped at $60 million annually for six years.
• Food Desert Relief Program: The program will use tax credits to incentivize businesses to establish and retain new supermarkets and grocery stores in food desert communities. The cap for tax credits is $40 million annually for six years.
• New Jersey Community-Anchored Development Program: The program will provide tax credits to anchor institutions to incentivize the expansion of targeted industries in the State and the continued development of certain areas of the State. Tax credits under this program are capped at $200 million annually for six years, but the $200 million annual cap will be split so that up to $130 million of tax credits will be for areas in the 13 northern counties of the State and $70 million for areas in the eight southern counties.
• New Jersey Aspire Program: The program, which replaces the Economic Revitalization & Growth Program, will provide tax credits to encourage redevelopment projects by covering certain project financing gap costs.
• New Jersey Emerge Program: The program, which replaces the Grow New Jersey program, will provide tax credits to encourage economic development, job creation, and the retention of significant numbers of jobs in imminent danger of leaving the State. Tax credits under the Aspire program combined with tax credits under the Emerge program are capped at $1.1 billion annually for six years, but the $1.1 billion annual cap will be split so that up to $715 million of tax credits will be for projects located in the northern counties of the State and $385 million for projects located in the southern counties.  The $1.1 billion cap does not apply to transformative projects. For transformative projects under the Aspire program and the Emerge program, the combined credits over six years is capped at $2.5 billion.
• Main Street Recovery Finance Program: The program will provide grants, loans, and loan guarantees to small businesses.  A total of $50 million is allocated for this program.
• New Jersey Ignite Program: The program will establish a public-private partnership providing start-up rent grants to collaborative workspaces to support the early months of an early-stage innovation economy business’s rent at the collaborative workspace. The law appropriates $250,000 for this program.

Next Steps for New Jersey Businesses

Many of the programs will require the NJEDA and other state agencies to enact implementing regulations. Additional guidance will also likely be forthcoming on each program.

Given that the tax incentive programs all have very specific eligibility requirements, interested businesses should now begin the preliminary process of determining whether they may benefit from any of the programs and whether they qualify to participate. At Scarinci Hollenbeck, our experienced and multi-disciplinary team of attorneys stand ready to help businesses of all sizes navigate the application process and reap the significant benefits of these new tax incentives.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Jeff Pittard, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.