By Bob Klausner
Fox Rothschild Partner, Real Estate Group
In the past, New Jersey has deserved its reputation as a state which is “over regulated” and not conducive for business. Traditionally, the state has been burdened with high taxes, high cost of living, and has offered few incentives to retain businesses in the state or to attract new companies from neighboring states.
This business-prohibitive climate has improved over the past few years through the Governor’s office and the State Legislature, which has provided several new incentives to companies that choose to stay in New Jersey or to relocate to our state’s urban centers.
As many of these incentive programs are set to expire, the New Jersey State Legislature has placed the final touches on the New Jersey Economic Opportunity Act of 2013 (NJEOA).
As a legal professional in the real estate industry with over 25 years of experience, I am thrilled that this bill has reached the final stage and will finally get the approval it deserves. The great state of New Jersey will finally offer more competitive incentives to attract business and industry.
The NJEOA is an aggressive initiative by New Jersey to promote job creation and spur redevelopment in the state’s urban centers, suburban office parks and even assist areas that have been impacted by Hurricane Sandy.
NJEOA does this by expanding the criteria for projects that qualify for assistance and by consolidating the five major economic development incentive programs into two existing programs. The first is the Grow New Jersey Assistance Program (GROWNJ) and the second is the Economic Redevelopment and Growth Grant Program (ERG).
NJEOA expands GROWNJ by providing incentives to attract and retain companies in New Jersey. It offers broader incentives for businesses that invest and create jobs in the state. The tax credit, ranging from $500 to $5,000 per job, is tied to the number of jobs created or retained and the location of these jobs and other criteria set forth in the legislation.
The Legislation also builds on the existing ERG to provide financing to close project financing gaps, rebuild public infrastructure tied to redevelopment projects, rehabilitate areas impacted by Hurricane Sandy and build markets that bring fresh produce to urban areas.
For residential redevelopment, the new ERG provides incentives for qualified residential projects, some of which can receive a tax credit of up to 35 percent of its capital investment, or up to 40 percent of the capital investment for projects designated in a Garden State Growth Zone.
The original bill contained prevailing wage requirements, affordable housing subsidies and geographic-based bonuses. While Governor Christie struck the prevailing wage provisions, he did the right thing by not holding this bill up any further by fighting the affordable housing subsidies and geographic-based bonuses and sending it back to the Legislature for a full vote.
I believe the program will serve as a catalyst for economic growth, which will revitalize communities, create jobs and attract new residents. This legislation will create opportunities for developers to work on high-profile projects as additional major corporations relocate to New Jersey, and existing New Jersey-based companies recommit to the state.
As a professional dealing directly with these programs, I am excited that the state government has taken steps to help the business prospects for the people of New Jersey that have been hit so hard by everything from man-made disasters (the Wall Street crisis) to the natural disaster of Hurricane Sandy. The New Jersey State Legislature correctly identified the need to reform our incentives program. It’s my sincere hope that the final version of this bill will correctly reflect the business community’s sentiment for an incentives program that’s free of bureaucracy and unnecessary additives. Now if only the U.S. Congress could follow New Jersey’s lead of bi-partisanship.
With more than 25 years of both legal and business experience in the real estate industry, Robert Klausner, partner at the law firm of Fox Rothschild, heads the firm’s New Jersey Real Estate Practice group.