Grow NJ Tax Credits Presented by Mike McCann Principal Garden - - PowerPoint PPT Presentation

Grow NJ Tax Credits

Presented by Mike McCann Principal – Garden State Incentives

Who is GSIG?

Garden State Incentives Group (GSIG) is a leader in securing and managing a variety of tax credits and grants. Experience is the key and we have been doing this since 1997

NJ ECONOMIC OPPORTUNITY ACT of 2013

• Modified and expanded the Grow New Jersey

(Grow NJ) and Economic Redevelopment (ERG) and Growth Programs.

• 2014 Amendment improved incentives for

projects in Atlantic City.

Grow NJ Program

• Grow NJ program is broadly aimed at industrial,

commercial and office projects, and excludes retail facilities.

• The prior Grow NJ Program required minimum

$20,000,000 investment and 100 full-time jobs.

• The value of the tax credits is limited to $5,000

per employee with bonuses that would allow the credit to reach $15,000 per employee.

GROW NJ – Expanded Incentive Areas

Areas in which Grow NJ incentives are available:

• PA 1 and PA 2
• Garden State Growth Zones (Camden, Trenton,

Passaic, Patterson)

• Distressed Municipalities
• Urban Transit Hubs
• Growth or redevelopment areas in State

Development and Redevelopment Plan, the Meadowlands, the Pinelands, the Highlands, or BRACC land

GROW NJ Capital Investment

• Capital investment requirement is a cost per

square foot.

• Site preparation, construction, furnishings, or

equipment.

• GROWTH ZONE: Site acquisition (within 24

months) and soft costs.

• Investment by the owner, landlord or the seller.

ERG PROGRAM

• ERG grants - used by developers of retail projects who

are not eligible for Grow NJ financing.

• Grants to reimburse developers for all or a portion of

the project costs that remain to be financed after all

• ther sources of capital have been accounted for

(“Project Financing Gap”).

• Payments are made to the developer from revenue

received by the State over 20 years.

• NJEDA must find that the revenue to be generated to

the State by the project will exceed the amount necessary to reimburse the developer for the Project Financing Gap.

ERG – Retail / Commercial

• The ERGG program requires developers to

provide at least 20% of the total project cost.

• An incentive grant of up to 30% of the total

project costs may be awarded for a term of up to 20 years.

• In Camden, an incentive grant of up to 40% of

the total project costs may be awarded for a term of up to 20 years.

ERG - Qualified Residential Projects

• $600,000,000 has been allocated to tax credits

for QRP.

• $250,000,000 of that amount has been allocated

for qualified residential projects located in South Jersey.

• Of that amount, $175,000,000 has been

allocated to Camden and Atlantic City.

• $75,000,000 has been allocated to other South

Jersey municipalities with an MRI of 400 or higher.

Application Deadlines

• Applications for Grow NJ tax credits is July 1, 2019.
• Project must be completed within 3 years. EDA can

grant two 6-month extensions.

• Applications for ERG grants must be filed by July 1,

2019.

• Applications for a QRP must be filed by July 1, 2016,

and the developer must obtain a temporary certificate of occupancy for the project no later than July 28, 2018.

Step by Step

Original Application to EDA:

• Time Frame: 30 – 90 days, depending on company size
• Actions: Contact the NJEDA to discuss the program,

than fill out application. The bigger the company, the longer the process. Requires Economic Impact Analysis.

Application Approval by NJEDA:

• Time Frame: 45 – 60 days
• Actions: Depending on your preparedness &

completeness – Signed by Governor at monthly board meeting

Executed Approval Letter:

• Time Frame: 60 Days
• Actions: None at this point

Required Investments:

• Time Frame: 12 to 24 months (depending on move in
• r build out)
• Actions: Find space, find vendors, build (could take a lot

longer), terminate existing lease, etc.

If less jobs than projected on original application:

• Time Frame: 30 Days Amendment
• Actions: Cost Benefit analysis updated

Step by Step

Green Building Standard Requirement:

• Time Frame: 30 to 60 Days
• Actions: Need plan approval from NJEDA and

internal agent of their choosing to review this

Occupancy Certificate:

• Time Frame: 30 Days
• Actions: Need to get Business Permit from town,

can do this at same time

Project Completion Certificate:

• Time Frame: 30 Days
• Actions: Need CPA to provide this, need to pre

plan this 30 days in advance

Receipt of Actual Certificate:

• Time Frame: 30 Days
• Actions: None

Buy/Sell Purchase Agreement:

• Time Frame: 90-120 Days
• Actions: start this before you complete, line up

potential buyers and start drafting agreement in advance of completion

State EDA Grow Buy-Sell Purchase Agreement:

• Time Frame: Concurrent with above
• Actions: None

Tax Clearance Certificates:

• Time Frame: 45 – 60 Days
• Actions: for Buyer, once you ID buyer, have them

get this to clear up any issues and get certificate. Need to have this when you submit application.

Transfer Application Submitted and Approved:

• Time Frame: 30 Days
• Actions: None

Payment:

• Time Frame: 15 – 45 Days
• Actions: Depending on direct use

Overall Timeline

Your company is ready to apply and make the move, but how long until we see the incentives? There is no short answer, since each group is different.

Budget 14 to 36 months!

The cost of Business & Growth

• Capex Min, depends on project, average is 2% of

project total.

• Approval Fee .5% of Award, not to exceed $500k-

Due upon execution of NJEDA Agreement.

• Tax Clearance $75/200 if expedited per renewal.
• Tax Credit Cert Issuance Fee .5% of Award, not to

exceed $500k-due upon receipt of tax credit.

• Annual Service Fee 2% of Annual Tax Credit-due

upon filing of annual compliance.

• Annual Audit Expenses: $2k - $20k per year

Selling: who and when?

• Tax credits are not

liquid assets, like a stock or a bond.

• Tax Credits will never

have a value over its face value.

• Tax credits are either Transferrable or Non–

Transferrable.

• Transferrable credits can be sold to another

purchaser, which is determined by the law creating the tax credit.

Who buys tax credits?

• Finding a group to

purchase is not an easy task.

• Garden State

Incentives will match your tax incentives with the best buyer.

GSIG’s Financial Option

How can I leverage my credits into cash for:

• Early capital
• Fee payments

GSIS works hand in hand with businesses to make this happen.

For additional information please contact Mike McCann Email: grownj@gardensi.com Phone: 856-409-5761