Bill Text: NJ A1190 | 2020-2021 | Regular Session | Introduced
Bill Title: "New Jersey Innovation Assistance Act"; establishes New Jersey Innovation Assistance Program to provide tax credits to certain businesses.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-01-14 - Introduced, Referred to Assembly Science, Innovation and Technology Committee [A1190 Detail]
Download: New_Jersey-2020-A1190-Introduced.html
STATE OF NEW JERSEY
219th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2020 SESSION
Sponsored by:
Assemblyman ANDREW ZWICKER
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
"New Jersey Innovation Assistance Act"; establishes New Jersey Innovation Assistance Program to provide tax credits to certain businesses.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act providing tax credits to certain businesses and supplementing P.L.1974, c.80 (C.34:1B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Innovation Assistance Act."
2. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"Affiliate" means an entity that directly or indirectly controls, is under common control with, or is controlled by the business. Control exists in all cases in which the entity is a member of a controlled group of corporations as defined pursuant to section 1563 of the Internal Revenue Code of 1986 (26 U.S.C. s.1563) or the entity is an organization in a group of organizations under common control as defined pursuant to subsection (b) or (c) of section 414 of the Internal Revenue Code of 1986 (26 U.S.C. s.414). A taxpayer may establish by clear and convincing evidence, as determined by the Director of the Division of Taxation in the Department of the Treasury, that control exists in situations involving lesser percentages of ownership than required by those statutes. An affiliate of a business may contribute to meeting either the qualified investment or new full-time employee requirements of a business that applies for a credit under section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Aviation district" means the area within a one-mile radius of the outermost boundary of the "Atlantic City International Airport," established pursuant to section 24 of P.L.1991, c.252 (C.27:25A-24).
"Business" means an applicant proposing to own or lease premises in a qualified business facility that is:
a corporation that is subject to the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5);
a corporation that is subject to the tax imposed pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15), or N.J.S.17B:23-5;
a partnership;
an S corporation;
a limited liability company; or
a nonprofit corporation.
If the business or tenant is a cooperative or part of a cooperative, then the cooperative may qualify for credits by counting the full-time employees and capital investments of its member organizations, and the cooperative may distribute credits to its member organizations. If the business or tenant is a cooperative that leases to its member organizations, the lease shall be treated as a lease to an affiliate or affiliates.
A business shall include an affiliate of the business if that business applies for a credit based upon any capital investment made by or full-time employees of an affiliate.
"Capital investment" in a qualified business facility means expenses by a business or any affiliate of the business incurred after application for any of the following:
a. site preparation and construction, repair, renovation, improvement, equipping, or furnishing on real property or of a building, structure, facility, or improvement to real property;
b. obtaining and installing furnishings and machinery, apparatus, or equipment, including but not limited to material goods subject to bonus depreciation under sections 168 and 179 of the federal Internal Revenue Code (26 U.S.C. s.168 and s.179), for the operation of a business on real property or in a building, structure, facility, or improvement to real property;
c. receiving Highlands Development Credits under the Highlands Transfer Development Rights Program authorized pursuant to section 13 of P.L.2004, c.120 (C.13:20-13); or
d. in a Garden State Growth Zone, the following also qualify as a capital investment: any development, redevelopment, and relocation costs, including, but not limited to, site acquisition if made within 24 months of application to the authority, engineering, legal, accounting, and other professional services required; and relocation, environmental remediation, and infrastructure improvements for the project area, including, but not limited to, on- and off-site utility, road, pier, wharf, bulkhead, or sidewalk construction or repair.
In addition to the foregoing, if a business acquires or leases a qualified business facility, the capital investment made or acquired by the seller or owner, as the case may be, if pertaining primarily to the premises of the qualified business facility, shall be considered a capital investment by the business and, if pertaining generally to the qualified business facility being acquired or leased, shall be allocated to the premises of the qualified business facility on the basis of the gross leasable area of the premises in relation to the total gross leasable area in the qualified business facility. The capital investment described herein may include any capital investment made or acquired within 24 months prior to the date of application so long as the amount of capital investment made or acquired by the business, any affiliate of the business, or any owner after the date of application equals at least 50 percent of the amount of capital investment, allocated to the premises of the qualified business facility being acquired or leased on the basis of the gross leasable area of the premises in relation to the total gross leasable area in the qualified business facility made or acquired prior to the date of application.
"College or university" means a county college, an independent institution of higher education, a public research university, or a State college.
"Commitment period" means the period of time that is two times the eligibility period.
"County college" means an educational institution established by one or more counties, pursuant to chapter 64A of Title 18A of the New Jersey Statutes.
"Deep poverty pocket" means a population census tract having a poverty level of 20 percent or more, and which is located within the qualified incentive area and has been determined by the authority to be an area appropriate for development and in need of economic development incentive assistance.
"Disaster recovery project" means a project located on property that has been wholly or substantially damaged or destroyed as a result of a federally-declared disaster which, after utilizing all disaster funds available from federal, State, county, and local funding sources, demonstrates to the satisfaction of the authority that access to additional funding authorized pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), is necessary to complete the redevelopment project, and which is located within the qualified incentive area and has been determined by the authority to be in an area appropriate for development and in need of economic development incentive assistance.
"Distressed municipality" means a municipality that is qualified to receive assistance under P.L.1978, c.14 (C.52:27D-178 et seq.), a municipality under the supervision of the Local Finance Board pursuant to the provisions of the "Local Government Supervision Act (1947)," P.L.1947, c.151 (C.52:27BB-1 et seq.), a municipality identified by the Director of the Division of Local Government Services in the Department of Community Affairs to be facing serious fiscal distress, a SDA municipality, or a municipality in which a major rail station is located.
"Doctoral university" means a university located within New Jersey that is classified as a doctoral university under the Carnegie Classification of Institutions of Higher Education's Basic Classification methodology on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Eligibility period" means the period in which a business may claim a tax credit under the New Jersey Innovation Assistance Program, beginning with the tax period in which the authority accepts certification of the business that it has met the capital investment and employment requirements of the New Jersey Innovation Assistance Program and extending thereafter for a term of not more than 10 years, with the term to be determined solely at the discretion of the applicant.
"Eligible position" or "full-time job" means a full-time position in a business in this State which the business has filled with a full-time employee.
"Full-time employee" means a person:
a. who is employed by a business for consideration for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment; or
b. who is employed by a professional employer organization pursuant to an employee leasing agreement between the business and the professional employer organization, pursuant to P.L.2001, c.260 (C.34:8-67 et seq.) for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, and whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.; or
c. who is a resident of another State but whose income is not subject to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. or who is a partner of a business who works for the partnership for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, and whose distributive share of income, gain, loss, or deduction, or whose guaranteed payments, or any combination thereof, is subject to the payment of estimated taxes, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.; and
d. who, except for purposes of the Statewide workforce, is provided, by the business, with employee health benefits under a health benefits plan authorized pursuant to State or federal law.
"Full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the business or any person who, at the time of project application, works in New Jersey for consideration for at least 35 hours per week for the business, or who renders any other standard of service generally accepted by custom or practice as full-time employment, but who, prior to project application, was not provided, by the business, with employee health benefits under a health benefits plan authorized pursuant to State or federal law.
"Garden State Create Zone" means the campus of a doctoral university, and the area within a three-mile radius of the outermost boundary of the campus of a doctoral university, according to a map appearing in the doctoral university's official catalog or other official publication on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Garden State Growth Zone" or "growth zone" means the four New Jersey cities with the lowest median family income based on the 2009 American Community Survey from the US Census, (Table 708. Household, Family, and Per Capita Income and Individuals, and Families Below Poverty Level by City: 2009); or a municipality which contains a Tourism District as established pursuant to section 5 of P.L.2011, c.18 (C.5:12-219) and regulated by the Casino Reinvestment Development Authority.
"Highlands development credit receiving area or redevelopment area" means an area located within a qualified incentive area and designated by the Highlands Water Protection and Planning Council for the receipt of Highlands Development Credits under the Highlands Transfer Development Rights Program authorized pursuant to section 13 of P.L.2004, c.120 (C.13:20-13).
"Incentive agreement" means the contract between the business and the authority, which sets forth the terms and conditions under which the business shall be eligible to receive the incentives authorized pursuant to the program.
"Incentive effective date" means the date the authority issues a tax credit based on documentation submitted by a business pursuant to section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Independent institution of higher education" means a college or university incorporated and located in New Jersey, which by virtue of law or character or license is a nonprofit educational institution authorized to grant academic degrees and which provides a level of education which is equivalent to the education provided by the State's public institutions of higher education, as attested by the receipt of and continuation of regional accreditation by the Middle States Association of Colleges and Schools, and which is eligible to receive State aid under the provisions of the Constitution of the United States and the Constitution of the State of New Jersey, but does not include any educational institution dedicated primarily to the education or training of ministers, priests, rabbis, or other professional persons in the field of religion.
"Major rail station" means a railroad station located within a qualified incentive area which provides access to the public to a minimum of six rail passenger service lines operated by the New Jersey Transit Corporation.
"Mega project" means:
a. a qualified business facility located in a port district housing a business in the logistics, manufacturing, energy, defense, or maritime industries, either:
(1) having a capital investment in excess of $20,000,000, and at which more than 250 full-time jobs are created; or
(2) at which more than 1,000 full-time jobs of the business are created;
b. a qualified business facility located in an urban transit hub housing a business of any kind, having a capital investment in excess of $50,000,000, and at which more than 250 full-time employees of the business are created;
c. a qualified business facility primarily used by a business principally engaged in research, development, or manufacture of a drug or device, as defined in R.S.24:1-1, or primarily used by a business licensed to conduct a clinical laboratory and business facility pursuant to the "New Jersey Clinical Laboratory Improvement Act," P.L.1975, c.166 (C.45:9-42.26 et seq.), either:
(1) having a capital investment in excess of $20,000,000, and at which more than 250 full-time employees of the business are created, or
(2) at which more than 1,000 full-time employees of the business are created.
"Minimum environmental and sustainability standards" means standards established by the authority in accordance with the green building manual prepared by the Commissioner of Community Affairs pursuant to section 1 of P.L.2007, c.132 (C.52:27D-130.6), regarding the use of renewable energy, energy-efficient technology, and non-renewable resources in order to reduce environmental degradation and encourage long-term cost reduction.
"New full-time job" means an eligible position created by the business at the qualified business facility that did not previously exist in this State. For the purposes of determining a number of new full-time jobs, the eligible positions of an affiliate shall be considered eligible positions of the business.
"Other eligible area" means the portions of the qualified incentive area that are not located within a distressed municipality or the priority area.
"Partnership" means an entity classified as a partnership for federal income tax purposes.
"Port district" means the portions of a qualified incentive area that are located within:
a. the "Port of New York District" of the Port Authority of New York and New Jersey, as defined in Article II of the Compact Between the States of New York and New Jersey of 1921; or
b. a 15-mile radius of the outermost boundary of each marine terminal facility established, acquired, constructed, rehabilitated, or improved by the South Jersey Port District established pursuant to "The South Jersey Port Corporation Act," P.L.1968, c.60 (C.12:11A-1 et seq.).
"Priority area" means the portions of the qualified incentive area that are not located within a distressed municipality and which:
a. are designated pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et al.), as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), a designated center under the State Development and Redevelopment Plan, or a designated growth center in an endorsed plan until June 30, 2013, or until the State Planning Commission revises and readopts New Jersey's State Strategic Plan and adopts regulations to revise this definition;
b. intersect with portions of: a deep poverty pocket, a port district, or federally-owned land approved for closure under a federal Commission on Base Realignment and Closure action;
c. are the proposed site of a disaster recovery project, a qualified incubator facility, a highlands development credit receiving area or redevelopment area, a tourism destination project, or transit oriented development; or
d. contain: a vacant commercial building having over 400,000 square feet of office, laboratory, or industrial space available for occupancy for a period of over one year; or a site that has been negatively impacted by the approval of a "qualified business facility," as defined pursuant to section 2 of P.L.2007, c.346 (C.34:1B-208).
"Professional employer organization" means an employee leasing company registered with the Department of Labor and Workforce Development pursuant to P.L.2001, c.260 (C.34:8-67 et seq.).
"Program" means the "New Jersey Innovation Assistance Program" established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Public research university" means a public research university as defined in section 3 of P.L.1994, c.48 (C.18A:3B-3).
"Qualified business facility" means any building, complex of buildings or structural components of buildings, and all machinery and equipment located within a qualified incentive area, used in connection with the operation of a business that is not solely engaged in final point of sale retail business at that location.
"Qualified incentive area" means:
a. an aviation district;
b. a port district;
c. a distressed municipality or urban transit hub municipality;
d. an area that is:
(1) designated pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et al.), as:
(a) Planning Area 1 (Metropolitan);
(b) Planning Area 2 (Suburban); or
(c) Planning Area 3 (Fringe Planning Area);
(2) located within a smart growth area and planning area designated in a master plan adopted by the New Jersey Meadowlands Commission pursuant to subsection (i) of section 6 of P.L.1968, c.404 (C.13:17-6) or section 10 of P.L.2015, c.19 (C.5:10A-10) or subject to a redevelopment plan adopted by the New Jersey Meadowlands Commission pursuant to section 20 of P.L.1968, c.404 (C.13:17-21) or section 7 of P.L.2015, c.19 (C.5:10A.7);
(3) located within any land owned by the New Jersey Sports and Exposition Authority, established pursuant to P.L.1971, c.137 (C.5:10-1 et seq.), within the boundaries of the Hackensack Meadowlands District as delineated in section 4 of P.L.1968, c.404 (C.13:17-4);
(4) located within a regional growth area, rural development area zoned for industrial use as of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), town, village, or a military and federal installation area designated in the comprehensive management plan prepared and adopted by the Pinelands Commission pursuant to the "Pinelands Protection Act," P.L.1979, c.111 (C.13:18A-1 et seq.);
(5) located within the planning area of the Highlands Region as defined in section 3 of P.L.2004, c.120 (C.13:20-3) or a highlands development credit receiving area or redevelopment area;
(6) located within a Garden State Growth Zone;
(7) located within land approved for closure under any federal Commission on Base Realignment and Closure action; or
(8) located only within the following portions of the areas designated pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et al.), as Planning Area 4A (Rural Planning Area), Planning Area 4B (Rural/Environmentally Sensitive) or Planning Area 5 (Environmentally Sensitive) if Planning Area 4A (Rural Planning Area), Planning Area 4B (Rural/Environmentally Sensitive) or Planning Area 5 (Environmentally Sensitive) is located within:
(a) a designated center under the State Development and Redevelopment Plan;
(b) a designated growth center in an endorsed plan until the State Planning Commission revises and readopts New Jersey's State Strategic Plan and adopts regulations to revise this definition as it pertains to Statewide planning areas;
(c) any area determined to be in need of redevelopment pursuant to sections 5 and 6 of P.L.1992, c.79 (C.40A:12A-5 and C.40A:12A-6) or in need of rehabilitation pursuant to section 14 of P.L.1992, c.79 (C.40A:12A-14);
(d) any area on which a structure exists or previously existed including any desired expansion of the footprint of the existing or previously existing structure provided the expansion otherwise complies with all applicable federal, State, county, and local permits and approvals;
(e) the planning area of the Highlands Region as defined in section 3 of P.L.2004, c.120 (C.13:20-3) or a highlands development credit receiving area or redevelopment area; or
(f) any area on which an existing tourism destination project is located.
"Qualified incentive area" shall not include any property located within the preservation area of the Highlands Region as defined in section 3 of P.L.2004, c.120 (C.13:20-3).
"Qualified incubator facility" means a commercial building located within a qualified incentive area: which contains 50,000 or more square feet of office, laboratory, or industrial space; which is located near, and presents opportunities for collaboration with, a research institution, teaching hospital, college, or university; and within which, at least 50 percent of the gross leasable area is restricted for use by one or more technology startup companies during the commitment period.
"SDA district" means an SDA district as defined in section 3 of P.L.2000, c.72 (C.18A:7G-3).
"SDA municipality" means a municipality in which an SDA district is situated.
"State college" means a State college or university established pursuant to chapter 64 of Title 18A of the New Jersey Statutes.
"Targeted industry" means any industry identified from time to time by the authority including initially, a transportation, manufacturing, defense, energy, logistics, life sciences, technology, health, and finance business, but excluding a primarily warehouse or distribution business.
"Technology startup company" means a for profit business that has been in operation fewer than five years and is developing or possesses a proprietary technology or business method of a high-technology or life science-related product, process, or service which the business intends to move to commercialization.
"Tourism destination project" means a qualified non-gaming business facility that will be among the most visited privately owned or operated tourism or recreation sites in the State, and which is located within the qualified incentive area and has been determined by the authority to be in an area appropriate for development and in need of economic development incentive assistance, including a non-gaming business within an established Tourism District with a significant impact on the economic viability of that District.
"Transit oriented development" means a qualified business facility located within a 1/2-mile radius, or one-mile radius for projects located in a Garden State Growth Zone, surrounding the mid-point of a New Jersey Transit Corporation, Port Authority Transit Corporation, or Port Authority Trans-Hudson Corporation rail, bus, or ferry station platform area, including all light rail stations.
"Urban transit hub" means an urban transit hub, as defined in section 2 of P.L.2007, c.346 (C.34:1B-208), that is located within an eligible municipality, as defined in section 2 of P.L.2007, c.346 (C.34:1B-208) and also located within a qualified incentive area.
"Urban transit hub municipality" means a municipality:
a. which qualifies for State aid pursuant to P.L.1978, c.14 (C.52:27D-178 et seq.), or which has continued to be a qualified municipality thereunder pursuant to P.L.2007, c.111; and
b. in which 30 percent or more of the value of real property was exempt from local property taxation during tax year 2006. The percentage of exempt property shall be calculated by dividing the total exempt value by the sum of the net valuation which is taxable and that which is tax exempt.
3. a. The New Jersey Innovation Assistance Program is hereby established as a program under the jurisdiction of the New Jersey Economic Development Authority and shall be administered by the authority. The purpose of the program is to encourage business development and job creation resulting in growing the State's economy. To implement this purpose, the program may provide tax credits to eligible businesses that create new full-time jobs for an eligibility period not to exceed 10 years.
To be eligible for any tax credits pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), a business's chief executive officer or equivalent officer shall submit a program application and demonstrate to the authority, at the time of application, that:
(1) the business, expressly including its landlord or seller, will make, acquire, or lease a capital investment equal to, or greater than, the applicable amount set forth in subsection b. of this section at a qualified business facility at which the business will create new full-time jobs in an amount equal to or greater than the applicable number set forth in subsection c. of this section while also maintaining the number of previously existing full-time jobs in this State;
(2) the qualified business facility shall be constructed in accordance with the minimum environmental and sustainability standards established by the authority pursuant to subsection b. of section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill);
(3) the capital investment resultant from the award of tax credits and the resultant creation of new full-time jobs will yield a net positive benefit to the State equaling at least 110 percent of the requested tax credit allocation amount, which determination is calculated prior to taking into account the value of the requested tax credit and shall be based on the benefits generated during the first 20 years following the completion of the project;
(4) the business has complied with all requirements for filing tax and information returns and for paying or remitting required State taxes and fees by submitting, as a part of the application, a tax clearance certificate, as described in section 1 of P.L.2007, c.101 (C.54:50-39); and
(5) the award of tax credits will be a material factor in the business's decision to create the minimum number of new full-time jobs for eligibility under the program.
b. The minimum capital investment required for a project to be eligible under the program shall be:
(1) for the rehabilitation, improvement, fit-out, or retrofit of an existing industrial, warehousing, logistics, or research and development premises for continued similar use by the business in at least 51 percent of the gross leasable area of the premises, a minimum investment of $20 per square foot of gross leasable area;
(2) for the new construction of an industrial, warehousing, logistics, or research and development premises for similar use by the business in at least 51 percent of the gross leasable area of the premises, a minimum investment of $60 per square foot of gross leasable area;
(3) for the rehabilitation, improvement, fit-out, or retrofit of an existing premises that does not qualify pursuant to paragraph (1) or (2) of this subsection, a minimum investment of $40 per square foot of gross leasable area; and
(4) for the new construction of a premises that does not qualify pursuant to paragraph (1) or (2) of this subsection, a minimum investment of $120 per square foot of gross leasable area.
c. The minimum number of new full-time jobs required to be eligible under this program shall be as follows:
(1) for a business that is a technology startup company or a manufacturing company, a minimum of 10 new full-time jobs;
(2) for a business engaged primarily in a targeted industry other than a technology startup company or a manufacturing company, a minimum of 25 new full-time jobs; and
(3) for any other business, a minimum of 35 new full-time jobs.
d. (1) To assist the authority in determining whether a proposed capital investment will yield a net positive benefit, the business's chief executive officer, or equivalent officer, shall submit a certification to the authority indicating:
(a) that any projected creation of new full-time jobs would not occur but for the provision of tax credits under the program; and
(b) that the business's chief executive officer, or equivalent officer, has reviewed the information submitted to the authority and that the representations contained therein are accurate.
(2) When considering an application, based upon new full-time jobs, that involves intra-State job transfers of previously existing full-time jobs, the authority shall require the business to submit the following information as part of its application: a full economic analysis of all locations under consideration by the business; all lease agreements, ownership documents, or substantially similar documentation for the business's current in-State locations.
(3) In the event that this certification by the business's chief executive officer, or equivalent officer, is found to be willfully false, the authority may revoke any award of tax credits in their entirety, which revocation shall be in addition to any other criminal or civil penalties that the business and the officer may be subject to.
e. A project that consists solely of point-of-final-purchase retail facilities shall not be eligible for a grant of tax credits. If a project consists of both point-of-final-purchase retail facilities and non-retail facilities, only the portion of the project consisting of non-retail facilities shall be eligible for an issuance of tax credits pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).
f. Nothing shall preclude a business from applying for tax credits under the program for more than one project at a qualified business facility within this State pursuant to one or more applications.
4. The authority shall require an eligible business to enter into an incentive agreement prior to the issuance of tax credits. The incentive agreement shall include, but shall not be limited to, the following:
a. a detailed description of the proposed project which will result in job creation, and the number of new full-time jobs that are approved for tax credits;
b. the eligibility period of the tax credits, including the first year for which the tax credits may be claimed;
c. personnel information that will enable the authority to administer the program;
d. a requirement that the applicant maintain the qualified business facility at a location in New Jersey for the commitment period, with at least the existing number of full-time jobs and the minimum number of new full-time jobs as required by the program, and a provision to permit the authority to recapture all or part of any tax credits awarded, at its discretion, if the business does not remain in compliance with this provision for the required term, and in the instance of the business terminating an existing incentive agreement, such permitted recapture may be calculated to recognize the period of time that the business was in compliance prior to termination;
e. a method for the business to certify that it has met the capital investment and employment requirements of the program criteria established pursuant to subsections b. and c. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) and to report annually to the authority the number of full-time jobs for which the tax credits are to be made;
f. a provision permitting an audit of the payroll records of the business from time to time, as the authority deems necessary;
g. a provision which permits the authority to amend the agreement; and
h. a provision establishing the conditions under which the agreement may be terminated.
5. a. The total amount of the tax credit for an eligible business for each new full-time job shall be as set forth in subsections b. through e. of this section. The total tax credit amount shall be calculated and credited to the business annually for each year of the eligibility period. A business may assign its ability to apply for the tax credit under this subsection to a nonprofit organization with a mission dedicated to attracting investment and completing development and redevelopment projects in a Garden State Growth Zone. The nonprofit organization or an organization operating a qualified incubator facility may make an application on behalf of a business which meets the requirements for the tax credit, or a group of non-qualifying businesses or positions, located at a qualified business facility, that shall be considered a unified project for the purposes of the tax credits provided under this section.
b. The base amount of the tax credit for each new full-time job shall be as follows:
(1) (a) for a qualified business facility located within an urban transit hub municipality, located within a Garden State Growth Zone, or which is a mega project, $5,000 per year;
(b) for a qualified business facility located within a Garden State Create Zone and used by an eligible business in a targeted industry to conduct a collaborative research relationship with a doctoral university within the zone, $5,000 per year;
(2) for a qualified business facility located within a distressed municipality but not qualifying under paragraph (1) of this subsection, $4,000 per year;
(3) for a qualified business facility in a priority area, $3,000 per year; and
(4) for a qualified business facility in other eligible areas, $500 per year.
c. In addition to the base amount of the tax credit, the amount of the tax credit to be awarded for each new full-time job shall be increased if the qualified business facility meets any of the following priority criteria or other additional or replacement criteria determined by the authority from time to time in response to evolving economic or market conditions:
(1) for a qualified business facility located in a deep poverty pocket or in an area that is the subject of a Choice Neighborhoods Transformation Plan funded by the federal Department of Housing and Urban Development, an increase of $1,500 per year;
(2) for a qualified business facility located in a qualified incubator facility, an increase of $500 per year;
(3) for a qualified business facility located within a transit oriented development, an increase of $2,000 per year;
(4) for a qualified business facility, other than a mega project, at which the capital investment in industrial premises for industrial use by the business is in excess of the minimum capital investment required for eligibility pursuant to subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), an increase of $1,000 per year for each additional amount of investment that exceeds the minimum amount required for eligibility by 20 percent, with a maximum increase of $3,000 per year;
(5) for a business with new full-time jobs at the qualified business facility with an average salary in excess of the existing average salary for the county in which the qualified business facility is located, or, in the case of a qualified business facility in a Garden State Growth Zone, a business that employs full-time positions at the qualified business facility with an average salary in excess of the average salary for the Garden State Growth Zone, an increase of $250 per year during the commitment period for each 35 percent by which the average salary levels for the new full-time employees at the qualified business facility exceeds the county or Garden State Growth Zone average salary, with a maximum increase of $1,500 per year;
(6) for a business with large numbers of new full-time jobs during the commitment period, the increases shall be in accordance with the following schedule:
(a) if the number of new full-time jobs is between 251 and 400, $500 per year;
(b) if the number of new full-time jobs is between 401 and 600, $750 per year;
(c) if the number of new full-time jobs is between 601 and 800, $1000 per year;
(d) if the number of new full-time jobs is between 801 and 1,000, $1,250 per year;
(e) if the number of new full-time jobs is in excess of 1,000, $1,500 per year;
(7) for a business in a targeted industry, an increase of $500 per year;
(8) for a qualified business facility exceeding the Leadership in Energy and Environmental Design's "Silver" rating standards or completes substantial environmental remediation, an additional increase of $250 per year;
(9) for a mega project or a qualified business facility located within a Garden State Growth Zone at which the capital investment in industrial premises for industrial use by the business exceeds the minimum capital investment required for eligibility pursuant to subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), an increase of $1,000 per year for each additional amount of investment that exceeds the minimum amount by 20 percent, with a maximum increase of $5,000 per year;
(10) for a project located within a half-mile of any light rail station constructed after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), an increase of $1,000 per year;
(11) for a project that generates solar energy on site for use within the project of an amount that equals at least 50 percent of the project's electric supply service needs, an increase of $250 per year;
(12) for a qualified business facility that includes a vacant commercial building having over 1,000,000 square feet of office or laboratory space available for occupancy for a period of over one year, an increase of $1,000 per year;
(13) for an eligible business in a targeted industry at a qualified business facility on the campus of a college or university other than a doctoral university, or at a qualified business facility within a three-mile radius of the outermost boundary of the campus of a college or university other than a doctoral university, which facility is used by the business to conduct a collaborative research relationship with the college or university, an increase of $1,000 per year. The boundary of the campus of a college or university shall be based upon a map appearing in the college's or university's official catalog or other official publication on the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill); and
(14) for a qualified business facility located in a population census tract that is certified and designated as an opportunity zone pursuant to section 1400Z-1 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1400Z-1, an increase of $500 per year.
d. The gross amount of the tax credit for an eligible business for each new full-time job shall be the sum of the base amount as set forth pursuant to subsection b. of this section and the various additional bonus amounts for which the business is eligible pursuant to subsection c. of this section, subject to the following limitations:
(1) for a mega project or a qualified business facility in a Garden State Growth Zone, the gross amount for each new full-time job shall not exceed $15,000 per year;
(2) for a qualified business facility located within an urban transit hub municipality, the gross amount for each new full-time job shall not exceed $12,000 per year;
(3) for a qualified business facility in a distressed municipality the gross amount for each new full-time job shall not exceed $11,000 per year;
(4) for a qualified business facility in other priority areas, the gross amount for each new full-time job shall not exceed $10,500 per year;
(5) for a qualified business facility in other eligible areas, the gross amount for each new full-time job shall not exceed $6,000 per year; and
(6) for a disaster recovery project, the gross amount for each new full-time job shall not exceed $2,000 per year.
e. (1) Notwithstanding the provisions of subsections a. through d. of this section, for each application approved by the authority's board, the amount of tax credits available to be applied by the business annually shall not exceed:
(a) $30,000,000 and provides a net benefit to the State as provided herein with respect to a mega project or a qualified business facility in a Garden State Growth Zone;
(b) $10,000,000 and provides a net benefit to the State as provided herein with respect to a qualified business facility in an urban transit hub municipality or a Garden State Create Zone;
(c) $8,000,000 and provides a net benefit to the State as provided herein with respect to a qualified business facility in a distressed municipality;
(d) $4,000,000 and provides a net benefit to the State as provided herein with respect to a qualified business facility in other priority areas, but not more than 90 percent of the withholdings of the business from the qualified business facility; and
(e) $2,500,000 and provides a net benefit to the State as provided herein with respect to a qualified business facility in other eligible areas, but not more than 90 percent of the withholdings of the business from the qualified business facility.
Under subparagraphs (a) through (e) of this paragraph, for each application for tax credits in excess of $4,000,000 annually, the amount of tax credits available to be applied by the business annually shall be the lesser of the maximum amount under the applicable paragraph or an amount determined by the authority necessary to complete the project, with this determination made by the authority's utilization of a full economic analysis of all locations under consideration by the business, all lease agreements, ownership documents, or substantially similar documentation for the business's current in-State locations, as applicable, and all lease agreements, ownership documents, or substantially similar documentation for the potential out-of-State location alternatives, to the extent they exist. Based on this information, and any other information deemed relevant by the authority, the authority shall independently verify and confirm the amount necessary to complete the project.
(2) The combined value of all credits approved in any fiscal year by the authority pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $200,000,000.
6. a. (1) A business shall submit its documentation to the authority indicating that it has met the capital investment and employment requirements specified in the incentive agreement for certification of its tax credit amount within three years following the date of approval of its application by the authority. The authority shall have the discretion to grant two six-month extensions of this deadline. Except as provided in subparagraph (b) of this paragraph, in no event shall the incentive effective date occur later than four years following the date of approval of an application by the authority.
(2) Full-time employment for an accounting or privilege period shall be determined as the average of the monthly full-time employment for the period.
b. (1) In conducting its annual review, the authority may require a business to submit any information determined by the authority to be necessary and relevant to its review.
The credit amount for any tax period for which the documentation of a business's credit amount remains uncertified as of a date three years after the closing date of that period shall be forfeited, although credit amounts for the remainder of the years of the eligibility period shall remain available to it.
The credit amount may be taken by the tax certificate holder for the tax period for which it was issued or may be carried forward for use by the tax certificate holder in any of the next 20 successive tax periods, and shall expire thereafter. The tax certificate holder may transfer the tax credit amount on or after the date of issuance or at any time within three years of the date of issuance for use by the transferee in the tax period for which it was issued or in any of the next 20 successive tax periods. Notwithstanding the foregoing, no more than the amount of tax credits equal to the total credit amount divided by the duration of the eligibility period in years may be taken in any tax period.
(2) Credits granted to a partnership shall be passed through to the partners, members, or owners, respectively, pro-rata or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method provided to the Director of the Division of Taxation in the Department of the Treasury accompanied by any additional information as the director may require.
(3) The amount of credit allowed may be applied against the tax liability otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and C.54:18A-3), pursuant to section 1 of P.L.1950, c.231 (C.17:32-15), or pursuant to N.J.S.17B:23-5.
c. (1) If, in any tax period, the business reduces the total number of full-time employees in its Statewide workforce by more than 20 percent from the number of full-time employees in its Statewide workforce in the last tax period prior to submitting an application for the program as described in section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), then the business shall forfeit its credit amount for that tax period and each subsequent tax period, until the first tax period for which documentation demonstrating the restoration of the business's Statewide workforce to the threshold levels required by the incentive agreement has been reviewed and approved by the authority, for which tax period and each subsequent tax period the full amount of the credit shall be allowed.
(2) If, in any tax period, the number of full-time employees employed by the business at the qualified business facility located within a qualified incentive area drops below 80 percent of the number of new and previously existing full-time jobs specified in the incentive agreement, then the business shall forfeit its credit amount for that tax period and each subsequent tax period, until the first tax period for which documentation demonstrating the restoration of the number of full-time employees employed by the business at the qualified business facility to 80 percent of the number of jobs specified in the incentive agreement.
(3) If the qualified business facility is sold by the owner in whole or in part during the eligibility period, the new owner shall not acquire the capital investment of the seller and the seller shall forfeit all credits for the tax period in which the sale occurs and all subsequent tax periods, provided however that any credits of the business shall remain unaffected.
d. The authority shall not enter into an incentive agreement with a business that has previously received incentives pursuant to the "Business Retention and Relocation Assistance Act," P.L.1996, c.25 (C.34:1B-112 et seq.), the "Business Employment Incentive Program Act," P.L.1996, c.26 (C.34:1B-124 et al.), the "Grow New Jersey Assistance Act," P.L.2011, c.149 (C.34:1B-242 et seq.), the "New Jersey Economic Opportunity Act of 2013," P.L.2013, c.161 (C.52:27D-489p et al.), the "Transformative Headquarters Economic Assistance Program" established pursuant to section 3 of P.L.2017, c.282 (C.34:1B-258), or any other program administered by the authority unless:
(1) the business has satisfied all of its obligations underlying the previous award of incentives or is compliant with section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill); or
(2) the capital investment incurred and new full-time jobs pledged by the business in the new incentive agreement are separate and apart from any capital investment or jobs underlying the previous award of incentives.
7. A business may apply to the Director of the Division of Taxation in the Department of the Treasury and the Chief Executive Officer of the authority for a tax credit transfer certificate, covering one or more years, in lieu of the business being allowed any amount of the credit against the tax liability of the business. The tax credit transfer certificate, upon receipt thereof by the business from the director and the Chief Executive Officer of the authority, may be sold or assigned, in full or in part, in an amount not less than $25,000, to any other person that may have a tax liability pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), pursuant to section 1 of P.L.1950, c.231 (C.17:32-15), or pursuant to N.J.S.17B:23-5. The certificate provided to the business shall include a statement waiving the business's right to claim that amount of the credit against the taxes that the business has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the business of less than 75 percent of the transferred credit amount before considering any further discounting to present value which shall be permitted, except that the 75 percent minimum measure of consideration shall not apply to the sale or assignment of a tax credit transfer certificate to an affiliate irrespective of whether the affiliate met the capital investment and employment requirements specified in the incentive agreement. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability shall be subject to the same limitations and conditions that apply to the use of the credit by the business that originally applied for and was allowed the credit.
8. a. The Chief Executive Officer of the authority, in consultation with the Director of the Division of Taxation in the Department of the Treasury, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) as are necessary to implement P.L. , c. (C. ) (pending before the Legislature as this bill), including but not limited to: examples of and the determination of capital investment; the enumeration of qualified incentive areas; the enumeration of specific targeted industries; specific delineation of the incentive areas; the determination of the limits, if any, on the expense or type of furnishings that may constitute capital improvements; the promulgation of procedures and forms necessary to apply for a tax credit, including the enumeration of the certification procedures; and provisions for tax credit applicants to be charged an initial application fee, and ongoing service fees, to cover the administrative costs related to the tax credit.
b. Through regulation, the Chief Executive Officer of the authority, in consultation with the Secretary of Higher Education, shall establish standards for collaborative research relationships between businesses in targeted industries and colleges and universities sufficient to qualify a business for an enhanced base or bonus tax credit amount under paragraph (13) of subsection c. of section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).
c. Through regulation, the authority shall establish minimum standards by which qualified business facilities shall be constructed or renovated in compliance with the minimum environmental and sustainability standards.
9. This act shall take effect on July 1, 2019 or on the 90th day following enactment, whichever is later. The Chief Executive Officer of the authority and the authority may take such anticipatory administrative action in advance thereof as shall be necessary for the implementation of this act.
STATEMENT
This bill, the "New Jersey Innovation Assistance Act," establishes the New Jersey Innovation Assistance Program (program) under the jurisdiction of the New Jersey Economic Development Authority (EDA). The EDA is required to administer the program to encourage business development and job creation to grow the State's economy by providing tax credits, for an eligibility period of up to 10 years, to eligible businesses that create new full-time jobs.
Under the bill, a business's chief executive officer or equivalent officer is required to demonstrate to the EDA, at the time of program application, that the business will make, acquire, or lease certain capital investments at a qualified business facility (facility) at which the business will create new full-time jobs while also maintaining the number of previously existing full-time jobs in this State. The business's chief executive officer or equivalent officer is also required to demonstrate that the business has complied with all requirements for filing tax and information returns and for paying or remitting required State taxes and fees, and that the award of tax credits will be a material factor in the business's decision to create the minimum number of new full-time jobs.
The bill establishes minimum capital investment required for a project to be eligible under the program, with lower minimum capital investment requirements for rehabilitation and improvement of existing properties and higher capital investment requirements for new construction. In addition, the capital investment requirements under the bill are lower for capital investments in the rehabilitation, improvement, or new construction of premises for industrial, warehousing, logistics, or research and development uses.
The bill also establishes the following minimum requirements for the number of new full-time jobs required to be eligible under this program:
(1) for a business that is a technology startup company or a manufacturing company, a minimum of 10 new full-time jobs;
(2) for a business engaged primarily in a targeted industry, as defined in the bill, other than a technology startup company or a manufacturing company, a minimum of 25 new full-time jobs; and
(3) for any other business, a minimum of 35 new full-time jobs.
The bill requires the business's chief executive officer, or equivalent officer, to submit a certification to the EDA indicating that any projected creation of new full-time jobs would not occur without provision of tax credits under the program and attesting to the accuracy of that information.
Under the bill, an eligible business is required to to enter into an incentive agreement with the EDA prior to the issuance of tax credits. The incentive agreement is required to contain information related to the proposed capital investment project, new job creation, tax credit eligibility periods, business personnel, access to records, business commitments, the recapture of incentives, business certifications, and agreement amendment and termination. Under the bill, a business in the program is generally required to maintain the new full-time jobs, along with previously existing full-time jobs, for a commitment period that is twice as long in duration as the eligibility period.
The bill establishes procedures for the calculation of program tax credits for each new full-time job based upon certain base amounts and bonuses, and further establishes tax credit caps related to individual facilities. Under the bill, the base amount of the tax credit for each new full-time job is based on the location of the facility in which the business makes a capital investment, the industry in which the business operates, and the designation of the capital investment project.
The bill limits the total tax credit available to an eligible business under a program agreement for each new full-time job.
For an application for tax credits in excess of $4,000,000 annually, the bill limits the amount of tax credits available to be applied by the business to the lesser of the maximum amount under the annual cumulative program tax credits available to the business or an amount determined by the EDA necessary to complete the project. The bill further specifies that the combined value of all credits approved in any fiscal year under the program shall not exceed $200,000,000.
Unless otherwise specified, the bill requires a business to submit documentation indicating that it has met the capital investment and employment requirements for certification of its tax credit amount within three years following the date of approval of the business's program application, but the bill empowers the EDA to grant two six-month extensions to the deadline.
Under the bill, the EDA may require a business to submit any information determined by the EDA to be necessary and relevant to the EDA's annual reviews. The bill provides that the credit amount for a tax period shall be forfeited if the documentation of a business's credit amount remains uncertified three years after the tax period closes. Under the bill, the credit amount may be taken by the tax certificate holder for the tax period for which it was issued or may be carried forward for the next 20 successive tax periods, and shall expire thereafter. The bill also includes provisions related to the application of the tax credits and to the distribution of tax credits when the credits are granted to a partnership. The bill also requires the forfeiture of tax credits if a business makes certain reductions to its workforce and provides for the restoration of tax credits upon restoration of the business's workforce. The bill also includes provisions related to the sale of a facility during the business's commitment period.
The bill prohibits the EDA from entering into an incentive agreement with a business that has previously received certain incentives unless the business has satisfied all of its obligations underlying the previous award of incentives or the capital investment incurred and new full-time jobs pledged by the business in the new incentive agreement are separate and apart from any capital investment or jobs underlying the previous award of incentives.
Under the bill, a business may apply to the Director of the Division of Taxation in the Department of the Treasury and the chief executive officer of the EDA for a tax credit transfer certificate, covering one or more years, in lieu of the business being allowed any amount of the credit against the tax liability of the business. Under the bill, the tax certificate holder may transfer the tax credit amount at any time within three years of the date of issuance for use by the transferee in the tax period for which it was issued or in any of the next 20 successive tax periods. A tax credit transfer certificate may then be sold or assigned, in full or in part, in an amount not less than $25,000, to any other person that may have certain tax liabilities. The bill prohibits the sale or assignment of any amount of a tax credit transfer certificate for consideration of less than 75 percent of the transferred credit amount, except that the minimum measure of consideration shall not apply to the sale or assignment of a tax credit transfer certificate to an affiliate of the business.
Under the bill, the chief executive officer of the EDA, in consultation with the Director of the Division of Taxation in the Department of the Treasury, is required to adopt rules to implement the bill, including but not limited to: examples of and the determination of capital investment; the enumeration of qualified incentive areas; the enumeration of specific targeted industries; specific delineation of the incentive areas; the determination of the limits, if any, on the expense or type of furnishings that may constitute capital improvements; the promulgation of procedures and forms necessary to apply for a tax credit, including the enumeration of the certification procedures; and provisions for tax credit applicants to be charged an initial application fee, and ongoing service fees, to cover the administrative costs related to the tax credit. The chief executive officer of the EDA, in consultation the Secretary of Higher Education, is also required to establish standards for collaborative research relationships between businesses in targeted industries and colleges and universities sufficient to qualify a business for enhanced base or bonus tax credits under the program. The bill further requires the EDA to establish minimum construction and renovation standards for facilities that also meet minimum environmental and sustainability standards.
The bill will take effect on July 1, 2019 or on the 90th day following enactment, whichever is later. The Chief Executive Officer of the EDA and the EDA are permitted to take anticipatory administrative action in advance of the effective date as necessary for the implementation of the bill.
