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Greenbaum, Rowe, Smith & Davis LLP Client Alert
4.5.21

The New Jersey Economic Recovery Act of 2020 (ERA), a seven-year, $14 billion package of incentive programs intended to encourage New Jersey job growth, property development and redevelopment, community partnerships, and numerous other economic development initiatives, was signed into law by Governor Phil Murphy on January 7, 2021.

This Client Alert focuses on the Economic Redevelopment and Growth (ERG) Program. The New Jersey Economic Development Authority (EDA) recently announced that the residential component of the once popular ERG program will be revitalized and relaunched under a provision of the ERA that will enable the EDA to award up to $50 million in new residential ERG tax credits.

Background

The ERG program was a state incentive program providing annual grants equal to certain incremental taxes generated from a development project, allowing the developers to address financing gaps for proposed development projects. The program was originally established as part of the New Jersey Economic Stimulus Act of 2009 but expired in July 2019 after Governor Murphy and state lawmakers failed to reach an agreement on either a short-term extension or replacement program.

The New ERG – Eligibility & Application

The revitalized phase of the ERG program will be administered based upon the pre-existing ERG regulations and statutes, as amended by the ERA, which added prevailing wage and minimum wage requirements. Under the ERA, residential ERG projects can receive tax credits of up to 30% of total eligible project costs. Projects in five cities — Atlantic City, Camden, Paterson, Passaic, and Trenton – can receive tax credits of up to 40% of eligible project costs.

Eligible residential projects include redevelopment projects that are predominantly residential, multi-family residential units for purchase or lease, or dormitory units for purchase or lease. Under the pre-existing ERG residential eligibility requirements, which are still applicable, residential projects must:

The EDA will accept applications based upon the new ERA funding starting June 1, 2021 and will consider any applications submitted prior to December 31, 2021.

The EDA anticipates issuing guidance with further information about the ERG program application process in early April.  We will keep you updated on this forthcoming guidance and other developments related to the New Jersey Economic Recovery Act of 2020. 

Please contact the author of this Alert, Hunain Sarwar hsarwar@greenbaumlaw.com | 973.577.1782 with questions concerning the incentives outlined in this overview or to discuss your specific business circumstances.  Mr. Sarwar is a member of the firm’s Financial Incentives & Economic Development Practice Group.

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