NJ economic Recovery Act of 2020 overview

The New Jersey Economic Recovery Act of 2020 (the “Act”) was signed into law by Governor Murphy on January 7, 2021. The purpose of this Act is to provide economic support to small businesses, as well as drive New Jersey’s economic recovery and growth by authorizing over $14 billion in various business tax credits and incentives. The Act introduced new incentive programs as well as making modifications to existing programs, as discussed below.
  • The Historic Property Reinvestment Act provides tax credits for part of the cost of rehabilitating historic properties in New Jersey. The tax credit will be eligible to a business only if it can demonstrate that without the tax credit, the rehabilitation project is not economically feasible and that a project financing gap exists.
  • The Brownfields Redevelopment Incentive Program Act provides tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs. The tax credit will be eligible to a developer that can demonstrate that they have not commenced any remediation prior to the date of application, the project is located on a brownfield site, the project is not economically feasible without the tax credit, a project financing gap exists and the developer has a letter from the governing body of the municipality in which the project is located. There are also some wage requirements that need to be considered.
  • The Food Desert Relief Act provides tax credits (and in some cases, grants or loans) to incentivize businesses to establish and retain new supermarkets and grocery stores in food desert communities. To be eligible for the tax credits the taxpayer must develop, and open for business to the public, or own and operate the first or second supermarket or grocery store in a designated food desert community.
  • The Food Desert Relief Act also offers grants and loans to entities eligible for the tax credits in lieu of the tax credits, or to entities that own and operate a mid-sized food retailer or small food retailer that commits to selling nutritious foods, including fresh fruits and vegetables, in a designated food desert community.
  • The New Jersey Aspire Program Act provides tax credits to encourage redevelopment projects by covering certain project financing gap costs. To be eligible for the tax credits the developer must demonstrate that without the credits, the project is not economically feasible, a project financing gap exists, the project is located in the incentive area, and that no work has commenced prior to the date of the application. There are various other environmental, sustainability and wage requirements that will need to be considered by the developer.
  • The New Jersey Community-Anchored Development Act provides tax credits to anchor institutions to incentivize the expansion of targeted industries in New Jersey and the continued development of certain areas of the program will provide a minimum of $5 million in tax credits to eligible projects.
  • The Emerge Program Act provides tax credits to encourage economic development, job creation, and the retention of significant numbers of jobs in imminent danger of leaving New Jersey. The base amount of the tax credit for each new or retained full time job for an eligible business ranges from $500 a year to $4,000 a year depending on where the business is located. This base amount of the credit will be increased by bonus amounts based on certain circumstances. To be eligible for the credit, the business must demonstrate that they will make, acquire, or lease a capital investment at a qualified business facility, they will create or retain full-time jobs at the facility, the business is located in a qualified incentive area, the tax credits are a material factor in their decision to create or retain the full-time jobs, and that this will yield a net positive benefit to the state of a specified amount.
  • The Personal Protective Equipment Program adds an incentive to provide tax credits for new hires involved in the manufacture of personal protective equipment in a qualified facility. The amount of the credit could be up to $10,000 for each qualifying new hire. There also must be a required minimum capital investment in a qualified facility and a required minimum number of new or retained qualifying full-time jobs depending on the location of the facility.
  • The New Jersey Innovation Evergreen Program provides for auctioning up to $300,000,000.00 in tax credits for cash to qualified venture firms, which must be used to invest in innovation as a catalyst for economic growth and to advance the competitiveness of the state’s businesses in the global economy.
  • The Main Street Recovery Finance Program Act provides grants, loans, and loan guarantees to small businesses. Grants awarded under this program may be used for capital improvements or to cover operating expenses. To receive a grant, the small business must provide a tax clearance certificate and must demonstrate that each worker employed is not paid less than $15 per hour.
  • The New Jersey Ignite Act provides a public-private partnership giving start-up rent grants to collaborative workspaces to defray the first months of an early-stage innovation economy business’s rent at the collaborative workspace. The purpose of the program is to foster early-stage innovation economy businesses and to help those businesses overcome barriers to commercial success.

In addition to the above new programs, modifications have been made to existing programs.

  • The eligibility requirements, disbursement of credits, and deadlines of the Offshore Wind Economic Development Act were changed . Most notable is that the qualified wind energy facility within an eligible wind energy zone must now be located in the state of New Jersey.
  • The Film Tax Credit has been revised to include provisions for “New Jersey film partners” and “New Jersey film-lease partners,” and to allow an additional $200 million of tax credits annually over 13 years.
  • The annual tax credit cap in the New Jersey Angel Investor Tax Credit Act increased from $25 million to $35 million and provisions were added for venture funds.
  • The Economic Redevelopment and Growth Grant Program extended deadlines for applying from July 1, 2019 until December 31, 2021 for qualified residential projects and mixed-use parking projects and allows an additional $220 million of tax credits to be awarded.

Please contact your Mazars LLP professional for additional information.

Published on January 25, 2021

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.