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On July 2, 2021, Governor Phil Murphy signed A.5939/S.3993 (new law), which revises provisions of the New Jersey Economic Recovery Act of 2020 and other previously enacted economic development programs.

The new law addresses key aspects of the core incentives programs related to job creation and capital investment, including the new Emerge NJ Program, the Urban Enterprise Zone (UEZ) Program, Grow NJ, Business Employment Incentive Program (BEIP) and the Business Retention and Relocation Assistance Grant (BRRAG) Program. The new law also revises provisions in the New Jersey Economic Recovery Act of 2020 concerning "food deserts," the brownfield program, offshore wind tax credits and more.

Emerge NJ

The Emerge NJ Program gives taxpayers that meet minimum thresholds and other requirements an annual nonrefundable income tax credit ranging from $500 to $8,000 for up to seven years per new job created. In certain circumstances, projects involving large-scale job retention can also qualify. The tax credits can be sold when taxpayers have insufficient tax liability to offset.

The new law sets forth a new requirement obligating eligible program applicants to demonstrate that the new and retained full-time jobs at the qualified business facility are subject to 80% or more of New Jersey withholding tax.

The Urban Enterprise Zone (UEZ)

The new law primarily addresses administration, funding and management of the UEZ program and includes the following changes:

• The expiration date for all existing zones is extended for 10 years, assuming they continue to meet all UEZ requirements.
• No new zones will be designated going forward. Some existing zones may lose their designation (10 years after the effective date of the new law) if they fail to meet certain demographic criteria.
• A new 10-year limitation applies for businesses claiming UEZ benefits. Businesses may not reapply once their eligibility period ends (previously, the program was "evergreen" with no time limit on benefits).
• The employee credit and capital investment credit that were previously offered to UEZ-certified businesses are terminated as of July 2, 2021.

GROW NJ, BEIP, BRRAG

The new law changes the definition of "full-time employee" for the purpose of several economic development programs, including the GROW NJ Assistance Program, BEIP and the BRRAG. Under the old rules, full-time employees had to be present at a qualified business facility for 80% of their time. The new law reduces this requirement to 60%, and clarifies that the amendment of this specific provision does not alter or terminate any waiver of the work-onsite requirement implemented by the New Jersey Economic Development Authority (NJEDA) due to the COVID-19 public health emergency and state of emergency.

Additional changes

The new law makes the following clarifications and changes to the programs created by the New Jersey Economic Recovery Act of 2020 and other previously enacted economic development programs.

• NJ Innovation Fellow Program — Allocates $10 million from the General Fund to support this new program, which distributes fellowship grants, through a competitive NJEDA process, for teams of entrepreneurs who operate businesses in targeted industries within certain eligible municipalities. The grants, which may not exceed $350,000 per team, will be used as income replacement for entrepreneurs who leave the workforce to open and operate the business.
• Offshore Wind Tax Credit Program — Provides up to $350 million in tax credits to qualified offshore wind projects.
• NJ Ignite Program -Expands program eligibility to include companies founded within the last seven years, as opposed to three years.
• Brownfield Redevelopment Incentive Program -Revises how brownfield tax credit awards are calculated. Projects located in a qualified incentive tract or government-restricted municipality will receive a credit of 60% of actual remediation costs, 60% of projected remediation costs or $8 million, whichever is least. All other projects will receive the lesser of a credit of (1) 50% of actual remediation costs, (2) 50% of projected remediation costs, or (3) $4 million. Lastly, prevailing wage requirements will apply to building services work.
• Food Desert Relief Program - Requires the NJEDA to designate geographical areas with limited access to nutritious foods as "food desert communities." The NJEDA may consider various additional factors when making this determination. The definition of "small-food retailer" is expanded to include non-traditional retailers such as mobile vendors and farmers' markets. In addition, the NJEDA can award grants to other eligible entities to support initiatives to strengthen the food security of residents in food desert communities.

Implications

Businesses currently receiving these incentives, and those seeking to claim these incentives, should review these changes and determine if the changes impact their eligibility. 

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