Bill Text: NJ S3406 | 2024-2025 | Regular Session | Introduced
Bill Title: Revises various provisions of the New Jersey Aspire Program.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-06-06 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S3406 Detail]
Download: New_Jersey-2024-S3406-Introduced.html
Sponsored by:
Senator PAUL A. SARLO
District 36 (Bergen and Passaic)
SYNOPSIS
Revises various provisions of the New Jersey Aspire Program.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning economic development and the New Jersey Aspire Program, amending and supplementing P.L.2020, c.156, and amending P.L.2005, c.29.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 55 of P.L.2020, c.156 (C.34:1B-323) is amended to read as follows:
55. As used in sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335):
"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to P.L.1983, c.530 (C.55:14K-1 et seq.).
"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 all areas within the boundaries of the Atlantic City International Airport, established pursuant to section 24 of P.L.1991, c.252 (C.27:25A-24), and the Federal Aviation Administration William J. Hughes Technical Center and the area within a one-mile radius of the outermost boundary of the Atlantic City International Airport and the Federal Aviation Administration William J. Hughes Technical Center.
"Board" means the Board of the New Jersey Economic Development Authority, established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Building services" means any cleaning or routine building maintenance work, including but not limited to sweeping, vacuuming, floor cleaning, cleaning of rest rooms, collecting refuse or trash, window cleaning, securing, patrolling, or other work in connection with the care or securing of an existing building, including services typically provided by a door-attendant or concierge. "Building services" shall not include any skilled maintenance work, professional services, or other public work for which a contractor is required to pay the "prevailing wage" as defined in section 2 of P.L.1963, c.150 (C.34:11-56.26).
"Cash flow" means the profit or loss that an investment property earns from rent, deposits, and other fees after financial obligations, such as debt, maintenance, government payments, and other expenses, have been paid.
"Collaborative workspace" means coworking, accelerator, incubator, or other shared working environments that promote collaboration, interaction, socialization, and coordination among tenants through the clustering of multiple businesses or individuals. For this purpose, the collaborative workspace shall be the greater of: 2,500 of dedicated square feet or 10 percent of the total property on which the redevelopment project is situated. The collaborative workspace shall include a community manager, be focused on collaboration among the community members, and include regularly scheduled education events for the community members. The collaborative workspace shall also include a physical open space that supports the engagement of its community members.
"Commercial project" means a redevelopment project, which is predominantly commercial and, if located in a government-restricted municipality, contains 25,000 or more square feet, or if located in any other municipality, contains 50,000 or more square feet of office and retail space, industrial space, or film studios, professional stages, television studios, recording studios, screening rooms, or other infrastructure for film production, and may include a parking component. The term "commercial project" includes a redevelopment project comprised solely of a health care or health services center, which contains not less than 10,000 square feet devoted to health care or health services, and which may include a parking component.
"Developer" means a person who enters or proposes to enter into an incentive award agreement pursuant to the provisions of section 60 of P.L.2020, c.156 (C.34:1B-328), including, but not limited, to a lender that completes a redevelopment project, operates a redevelopment project, or completes and operates a redevelopment project.
"Director" means the Director of the Division of Taxation in the Department of the Treasury.
"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.
"Economic development incentive" means a financial incentive, awarded by the authority, or agreed to between the authority and a business or person, for the purpose of stimulating economic development or redevelopment in New Jersey, including, but not limited to, a bond, grant, loan, loan guarantee, matching fund, tax credit, or other tax expenditure.
"Eligibility period" means the period not to exceed 15 years for a commercial or mixed-use project or the period not to exceed 10 years for a residential project specified in an incentive award agreement during which a developer may claim a tax credit under the program, as such period shall be determined by the authority pursuant to subsection b. of section 60 of P.L.2020, c.156 (C.34:1B-328).
"Enhanced area" means (1) a municipality that contains an urban transit hub, as defined in section 2 of P.L.2007, c.346 (C.34:1B-208); (2) the five municipalities with the highest poverty rates according to the 2017 Municipal Revitalization Index; and (3) the three municipalities with the highest percentage of SNAP recipients according to the 2017 Municipal Revitalization Index.
"Environmental remediation costs" means any costs incurred by a developer in the completion of any actions necessary to investigate, clean up, or respond to a known, suspected, or threatened discharge of contaminants, including, as necessary, the preliminary assessment, site investigation, remedial investigation, and remedial action, pursuant to sections 23 through 43 and section 45 of P.L.1993, c.139 (C.58:10B-1 et seq.).
"Food delivery source" means access to nutritious foods, such as fresh fruits and vegetables, through grocery operators, including, but not limited to a full-service supermarket or grocery store, and other healthy food retailers of at least 16,000 square feet, including, but not limited to, a prepared food establishment selling primarily nutritious ready-to-serve meals.
"Food desert community" means a physically contiguous area in the State in which residents have limited access to nutritious foods, such as fresh fruits and vegetables, and that has been designated as a food desert community pursuant to subsection b. of section 38 of P.L.2020, c.156 (C.34:1B-306).
"Government-restricted municipality" means a municipality in this State:
(1) with a municipal revitalization index distress score of at least [75,] 40;
(2) that met the criteria for designation as an urban aid municipality in the 2019 State fiscal year[,] ; and
(3) (a) that, on the effective date of P.L.2020, c.156 (C.34:1B-269 et al.), is subject to financial restrictions imposed pursuant to the "Municipal Stabilization and Recovery Act," P.L.2016, c.4 (C.52:27BBBB-1 et seq.)[, or] ;
(b) is restricted in its ability to levy property taxes on property in that municipality as a result of the State of New Jersey owning or controlling property representing at least 25 percent of the total land area of the municipality or as a result of the federal government of the United States owning or controlling at least 50 acres of the total land area of the municipality, which is dedicated as a national natural landmark;
(c) that has a population greater than 300,000 according to the latest federal decennial census and the municipality is located within a county of the first class with a population greater than 750,000 and less than 900,000 according to the latest federal decennial census;
(d) that has a population greater than 65,000 and less than 70,000 according to the latest federal decennial census and the municipality is located within a county of the first class with a population greater than 750,000 and less than 900,000 according to the latest federal decennial census;
(e) that has a population greater than 65,000 and less than 70,000 according to the latest federal decennial census and the municipality is located within a county of the first class with a population greater than 600,000 and less than 750,000 according to the latest federal decennial census;
(f) that has a population greater than 100,000 according to the latest federal decennial census and the municipality is located within a county of the first class with a population greater than 550,000 and less than 600,000 according to the latest federal decennial census;
(g) that has a population greater than 50,000 and less than 60,000 according to the latest federal decennial census and the municipality is designated as the county seat of a county of the second class with a population greater than 800,000 according to the latest federal decennial census;
(h) that has a population greater than 70,000 and less than 100,000 according to the latest federal decennial census and the municipality is designated as the county seat of a county of the second class with a population greater than 515,000 and less than 525,000 according to the latest federal decennial census;
(i) that has a population greater than 50,000 according to the latest federal decennial census and the municipality is located within a county of the third class with a population greater than 150,000 according to the latest federal decennial census;
(j) that has a population greater than 25,000 according to the latest federal decennial census and the municipality is designated as the county seat of a county of the third class with a population greater than 150,000 according to the latest federal decennial census; or
(k) that has a population greater than 100,000 according to the latest federal decennial census and the municipality is located within a county of the fifth class with a population greater than 400,000 and less than 640,000 according to the latest federal decennial census.
"Health care or health services center" means an establishment that consists of not less than 10,000 square feet devoted to health care or health services, where patients are admitted for or seek examination and treatment by one or more physicians, dentists, psychologists, or other medical practitioners, and which is located in a municipality with a Municipal Revitalization Index distress score of at least 50, a distressed municipality, or a qualified incentive tract.
"Hospitality establishment" means a hotel, motel, or any business, however organized, that sells food, beverages, or both for consumption by patrons on the premises.
"Incentive area" means an aviation district; a port district; an area designated pursuant to the "State Planning Act," P.L.1985, c.398 (C.52:18A-196 et seq.), as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or a Designated Center, provided an area designated as Planning Area 2 (Suburban) or a Designated Center shall be located within a one-half mile radius of the mid-point, with bicycle and pedestrian connectivity, of a New Jersey Transit Corporation, Port Authority Transit Corporation, or Port Authority Trans-Hudson Corporation rail, bus, or ferry station, including all light rail stations, or a high-frequency bus stop as certified by the New Jersey Transit Corporation; an area designated as a brownfield site pursuant to the "Brownfield and Contaminated Site Remediation Act," sections 23 through 43 and section 45 of P.L.1993, c.139 (C.58:10B-1 et seq.); and an area of not less than 100 acres for which a licensed site remediation professional has certified environmental remediation costs, as defined in this section and in accordance with the "Site Remediation Reform Act," sections 1 through 29 of P.L.2009, c.60 (C.58:10C-1 et seq.), in an amount not less than $10,000,000, provided that any portion of such area is located in an area that otherwise qualifies as an incentive area.
"Incentive award" means an award of tax credits to reimburse a developer for all or a portion of the project financing gap of a redevelopment project pursuant to the provisions of sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335).
"Incentive award agreement" means the contract executed between a developer and the authority pursuant to section 60 of P.L.2020, c.156 (C.34:1B-328), which sets forth the terms and conditions under which the developer may receive the incentive awards authorized pursuant to the provisions of sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335).
"Incubator facility" means a commercial property, which contains 5,000 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 75 percent of the gross leasable area is restricted for use by one or more technology startup companies.
"Individuals with special needs" means individuals with mental illness, individuals with physical or developmental disabilities, and individuals in other emerging special needs groups identified by the authority, based on guidelines established for the administration of the Special Needs Housing Trust Fund established pursuant to section 1 of P.L.2005, c.163 (C.34:1B-21.25a) or developed in consultation with other State agencies.
"Labor harmony agreement" means an agreement between a business that serves as the owner or operator of a retail establishment, hospitality establishment, or distribution center and one or more labor organizations, which requires, for the duration of the agreement: that any participating labor organization and its members agree to refrain from picketing, work stoppages, boycotts, or other economic interference against the business; and that the business agrees to maintain a neutral posture with respect to efforts of any participating labor organization to represent employees at an establishment or other unit in the retail establishment, hospitality establishment, or distribution center, agrees to permit the labor organization to have access to the employees, and agrees to guarantee to the labor organization the right to obtain recognition as the exclusive collective bargaining representatives of the employees in an establishment or unit at the retail establishment, hospitality establishment, or distribution center by demonstrating to the New Jersey State Board of Mediation, Division of Private Employment Dispute Settlement, or a mutually agreed-upon, neutral, third party that a majority of workers in the unit have shown their preference for the labor organization to be their representative by signing authorization cards indicating that preference. The labor organization or organizations shall be from a list of labor organizations which have requested to be on the list and which the Commissioner of Labor and Workforce Development has determined represent substantial numbers of retail establishment, hospitality establishment, or distribution center employees in the State.
"Low-income housing" means housing affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross household income equal to 50 percent or less of the median gross household income for households of the same size within the housing region in which the housing is located.
"Major cultural institution" means a public or nonprofit institution, not including an institution of higher education, within this State that engages in the cultural, intellectual, scientific, environmental, educational, or artistic enrichment of the people of this State, and which institution is designated by the board as a major cultural institution.
"Major rail station" means a railroad station that is located within a qualified incentive area and that provides to the public access to a minimum of six rail passenger service lines operated by the New Jersey Transit Corporation.
"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 to reduce environmental degradation and encourage long-term cost reduction.
"Moderate-income housing" means housing affordable according to federal Department of Housing and Urban Development or other recognized standards for home ownership and rental costs and occupied or reserved for occupancy by households with a gross household income equal to more than 50 percent, but less than 80 percent, of the median gross household income for households of the same size within the housing region in which the housing is located.
"Municipal Revitalization Index" means the index by the Department of Community Affairs ranking New Jersey's municipalities according to eight separate indicators that measure diverse aspects of social, economic, physical, and fiscal conditions in each locality.
"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.).
"Program" means the New Jersey Aspire Program established by section 56 of P.L.2020, c.156 (C.34:1B-324).
"Project cost" means the costs incurred in connection with a redevelopment project by a developer until the issuance of a permanent certificate of occupancy, or until such other time specified by the authority, for a specific investment or improvement, including the costs relating to lands, except the cost of acquiring such lands, buildings, improvements, real or personal property, or any interest therein, including leases discounted to present value, including lands under water, riparian rights, space rights, and air rights acquired, owned, developed or redeveloped, constructed, reconstructed, rehabilitated, or improved, any environmental remediation costs, plus costs not directly related to construction, including capitalized interest paid to third parties, of an amount not to exceed 20 percent of the total costs and the cost of infrastructure improvements, including ancillary infrastructure projects. When 100 percent of the residential units constructed in a residential project are reserved for occupancy by low- and moderate-income households, the term "project cost" shall also include the developer fees paid before acquiring permanent financing, as well as the deferred developer fees approved pursuant to the rules established by the agency. The fees associated with the application or administration of a grant under sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through 34:1B-335) shall not constitute a project cost.
"Project financing gap" means the part of the total project cost, including reasonable and appropriate return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to developer contributed capital, which shall not be less than 20 percent of the total project cost, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources on a non-recourse basis; provided, however, that for a redevelopment project located in a government-restricted municipality, the developer contributed capital shall not be less than 10 percent of the total project cost. Developer contributed capital may consist of cash, deferred development fees, costs for project feasibility incurred within the 12 months prior to application, property value less any mortgages when the developer owns the project site, and any other investment by the developer in the project deemed acceptable by the authority, as provided by regulations promulgated by the authority. Property value shall be valued at the lesser of: (i) the purchase price, provided the property was purchased pursuant to an arm's length transaction within 12 months of application; or (ii) the value as determined by a current appraisal.
"Project labor agreement" means a form of pre-hire collective bargaining agreement covering terms and conditions of a specific project that satisfies the requirements set forth in section 5 of P.L.2002, c.44 (C.52:38-5).
"Qualified incentive tract" means (i) a population census tract having a poverty rate of 20 percent or more; or (ii) a census tract in which the median family income for the census tract does not exceed 80 percent of the greater of the Statewide median family income or the median family income of the metropolitan statistical area in which the census tract is situated.
"Quality childcare facility" is a child care center licensed by the Department of Children and Families or a registered family child care home with the Department of Human Services, operating continuously, which has not been subject to an enforcement action, and which has and maintains a licensed capacity for children age 13 years or younger who attend for less than 24 hours a day.
"Reasonable and appropriate return on investment" means the discount rate at which the present value of the future cash flows of an investment equals the cost of the investment. In determining the "reasonable and appropriate return on investment," an investment shall not include any federal, State, or local tax credits. For a residential project that utilizes federal low-income housing tax credits awarded by the agency, the "reasonable and appropriate return on investment" shall be based on the approval of deferred developer fees pursuant to the rules established by the agency. In the event that a residential project, which utilizes federal low-income housing tax credits awarded by the agency, generates returns on equity other than federal or local grants or proceeds from the sale of federal or local tax credits, the "reasonable and appropriate return on investment" shall be based on both the discount rate at which the present value of the future cash flows of an investment equal the cost of the investment for the entire project, and when evaluating only the units financed with federal low-income housing tax credits awarded by the agency, the approval of deferred developer fees pursuant to the rules established by the agency.
"Redevelopment project" means a specific construction project or improvement or phase of a project or improvement undertaken by a developer, owner or tenant, or both, and any ancillary infrastructure project. A redevelopment project may involve construction or improvement upon lands, buildings, improvements, or real and personal property, or any interest therein, including lands under water, riparian rights, space rights, and air rights, acquired, owned, developed or redeveloped, constructed, reconstructed, rehabilitated, or improved.
"Residential project" means a redevelopment project that is predominantly residential, intended for multi-family residency, and may include a parking component.
"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.
"Technology startup company" means a for-profit business that has been in operation fewer than seven years at the time that it initially occupies or expands in a qualified business facility and is developing or possesses a proprietary technology or business method of a high technology or life science-related product, process, or service, which proprietary technology or business method the business intends to move to commercialization. The business shall be deemed to have begun operation on the date that the business first hired at least one employee in a full-time position.
"Total project cost" means the costs incurred in connection with the redevelopment project by the developer until the issuance of a permanent certificate of occupancy, or upon such other event evidencing project completion as set forth in the incentive grant agreement, for a specific investment or improvement.
"Tourism destination project" means a non-gaming business facility that will be among the most visited privately owned or operated tourism or recreation sites in the State, and which 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 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 is located within a qualified incentive area.
"Transit hub municipality" means a Transit Village or 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.
"Transit Village" means a municipality that has been designated as a transit village by the Commissioner of Transportation and the Transit Village Task Force established pursuant to P.L.1985, c.398 (C.27:1A-5).
(cf: P.L.2023, c.98, s.1)
2. Section 57 of P.L.2020, c.156 (C.34:1B-325) is amended to read as follows:
57. a. Prior to March 1, 2029, a developer shall be eligible to receive an incentive award for a redevelopment project only if the developer demonstrates to the authority at the time of application that:
(1) without the incentive award, the redevelopment project is not economically feasible;
(2) a project financing gap exists, or the authority determines that the redevelopment project will generate a below market rate of return;
(3) the redevelopment project, except a film studio, professional stage, television studio, recording studio, screening room, or other infrastructure used for film production, is located in the incentive area;
(4) except for demolition and site remediation activities, the developer has not commenced any construction at the site of the redevelopment project prior to submitting an application, unless the authority determines that the redevelopment project would not be completed otherwise or, in the event the redevelopment project is to be undertaken in phases, the requested incentive award is limited to only phases for which construction has not yet commenced;
(5) the redevelopment project shall comply with minimum environmental and sustainability standards;
(6) the redevelopment project shall comply with the authority's affirmative action requirements, adopted pursuant to section 4 of P.L.1979, c.303 (C.34:1B-5.4);
(7) (a) during the eligibility period, each worker employed to perform construction work at the redevelopment project shall be paid not less than the prevailing wage rate for the worker's craft or trade, as determined by the Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.) and P.L.2005, c.379 (C.34:11-56.58 et seq.), unless the redevelopment project is a residential project for which the developer has negotiated and executed a project labor agreement pursuant to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.);
(b) during the eligibility period, each worker employed to perform building services work at the redevelopment project, whether pursuant to contract by the developer or a commercial tenant, commercial subtenant, or other commercial occupant, shall be paid not less than the prevailing wage rate for the worker's craft or trade, as determined by the Commissioner of Labor and Workforce Development pursuant to P.L.1963, c.150 (C.34:11-56.25 et seq.) and P.L.2005, c.379 (C.34:11-56.58 et seq.), except that this requirement shall not apply to workers employed to perform building services work by a commercial tenant, commercial subtenant, or other commercial occupant that has a leasehold interest or other occupancy right in a redevelopment project, which leasehold interest or other occupancy right encompasses less than 5,000 square feet of space within the project. The developer shall include in all commercial leases or other commercial occupancy agreements, and shall require that all subleases or other commercial occupancy agreements applicable to the redevelopment project include, a provision setting forth the requirements of this subparagraph, which provision shall be in a form acceptable to the authority. Notwithstanding any provisions of law to the contrary, if a commercial tenant, commercial subtenant, or other commercial occupant violates this provision due to the underpayment of the required prevailing wage rate, then the issuance of tax credits to the developer and any co-applicant shall be delayed until such time as documentation demonstrating compliance has been provided to the Commissioner of Labor and Workforce Development, subsequently reviewed and approved by the Commissioner of Labor and Workforce Development, and verified by the authority, which reviews and verification shall be completed. If a violation is not cured, or is not capable of being cured, within one year of receipt of notice of the violation, then the developer and any co-applicant shall forfeit 50 percent of the tax credits otherwise authorized for the tax period in which the notice of violation was issued. If the violation is not cured on or before the conclusion of that tax period, the developer and any co-applicant shall forfeit up to 100 percent of the tax credits otherwise authorized, as determined by the authority, in each subsequent tax period until the first tax period for which documentation demonstrating compliance has been provided to the Commissioner of Labor and Workforce Development, subsequently reviewed and approved by the Commissioner of Labor and Workforce Development, and verified by the authority, which reviews and verifications shall be completed. In this event, the developer and any co-applicant shall be allowed the full tax credit amount beginning in the tax period in which documentation of compliance was reviewed and approved by the Commissioner of Labor and Workforce Development and verified by the authority, including each subsequent tax period in which the tax credits are otherwise authorized;
(c) in the event a redevelopment project, or any portion thereof, is undertaken by a tenant pursuant to a contract and the tenant has a leasehold of more than 55 percent of space in the building owned or controlled by the developer, the requirement that each worker employed to perform building service work at the building be paid not less than the prevailing wage shall apply to the entire building, except as otherwise provided in subparagraph (b) of this paragraph for commercial tenants, commercial subtenants, or other commercial occupants with a leasehold interest or other occupancy right encompassing less than 5,000 square feet;
(8) (a) the redevelopment project shall be completed, and the developer shall be issued a certificate of occupancy for the redevelopment project facilities by the applicable enforcing agency, within four years of executing the incentive award agreement, or in the case of a redevelopment project with a project cost in excess of $50,000,000, the incentive phase agreement corresponding to the redevelopment project; or
(b) in the discretion of the authority, a redevelopment project with a project cost in excess of $50,000,000, and that is authorized to be completed in phases, may be allowed no more than six years from the date on which the incentive award agreement is executed to be issued a certificate of occupancy by the applicable enforcement agency;
(9) the developer 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
(10) the developer is not more than 24 months in arrears at the time of application.
b. In addition to the requirements set forth in subsection a. of this section, for a commercial project to qualify for an incentive award the developer shall demonstrate that the developer shall contribute capital of at least 20 percent of the total project cost, except that if a redevelopment project is located in a government-restricted municipality, the developer shall contribute capital of at least 10 percent of the total project cost.
c. In addition to the requirements set forth in subsection a. of this section, for a residential project or a commercial project comprised solely of a health care or health service center to qualify for an incentive award, the residential project or health care or health service center shall:
(1) have a total project cost of at least $17,500,000, if the project is located in a municipality with a population greater than 200,000 according to the latest federal decennial census;
(2) have a total project cost of at least $10,000,000 if the project is located in a municipality with a population less than 200,000 according to the latest federal decennial census; or
(3) have a total project cost of at least $5,000,000 if the project is in a qualified incentive tract or government-restricted municipality.
d. In addition to the requirements set forth in subsections a. and c. of this section, for a residential project consisting of newly-constructed residential units to qualify for an incentive award, the developer shall reserve at least 20 percent of the residential units constructed for occupancy by low- and moderate-income households with affordability controls as adopted by the authority, in consultation with the agency, in accordance with paragraph (2) of subsection a. of section 56 of P.L.2020, c.156 (C.34:1B-324), except that a residential project receiving a federal historic rehabilitation tax credit pursuant to section 47 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.47, or a tax credit pursuant to the "Historic Property Reinvestment Act," sections 2 through 8 of P.L.2020, c.156 (C.34:1B-270 through 34:1B-276), shall be exempt from the affordability controls related to bedroom distribution.
e. Prior to the board
considering an application submitted by a developer, the authority shall
confirm with the Department of Labor and Workforce Development, the Department
of Environmental Protection, and the Department of the Treasury whether the developer
is in substantial good standing with the respective department, or has entered
into an agreement with the respective department that includes a practical
corrective action plan for the developer. The developer shall certify that any
contractors or subcontractors that will perform work at the redevelopment
project: (1) are registered as required by "The Public Works Contractor
Registration Act," P.L.1999, c.238 (C.34:11-56.48 et seq.); (2) have not
been debarred by the Department of Labor and Workforce Development from
engaging in or bidding on Public Works Contracts in the State; and (3) possess
a tax clearance certificate
issued by the Division of Taxation in the Department of the Treasury. The authority may also contract with an independent third party to perform a background check on the developer.
(cf: P.L.2023, c.98, s.3)
3. Section 58 of P.L.2020, c.156 (C.34:1B-326) is amended to read as follows:
58. a. Prior to March 1, 2029, for redevelopment projects eligible pursuant to section 57 of P.L.2020, c.156 (C.34:1B-325) for which a developer is seeking an incentive award for the redevelopment project, the developer shall submit an application to the authority and, in the case of a residential project, shall submit an application to the authority and the agency, in a form and manner prescribed in regulations adopted by the authority pursuant to section 67 of P.L.2020, c.156 (C.34:1B-335). The authority shall accept applications for incentive awards during the grant periods established pursuant to section 59 of P.L.2020, c.156 (C.34:1B-327).
b. The authority shall not consider an application for a commercial project unless the developer submits a letter evidencing support for the commercial project from the governing body of the municipality in which the commercial project is located with the application.
c. The authority shall review the project cost, evaluate and validate the project financing gap estimated by the developer, and conduct a State fiscal impact analysis to ensure that the overall public assistance provided to the project will result in a net positive benefit to the State, provided that the net benefit analysis shall not apply to capital investment for a food delivery source; a health care or health services center; or a residential project. In determining whether a project will result in a net positive benefit to the State, the authority shall not consider the value of any taxes exempted, abated, rebated, or retained under the "Five-Year Exemption and Abatement Law," P.L.1991, c.441 (C.40A:21-1 et seq.), the "Long Term Tax Exemption Law," P.L.1991, c.431 (C.40A:20-1 et al.), the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.), or any other law that has the effect of lowering or eliminating the developer's State or local tax liability. The determination made pursuant to this subsection shall be based on the potential tax liability of the developer without regard for potential tax losses if the developer were to locate in another state. The authority shall assess the cost of these reviews to the applicant. A developer shall pay to the authority the full amount of the direct costs of an analysis concerning the developer's application for a tax credit that a third party retained by the authority performs, if the authority deems such retention to be necessary. The authority shall evaluate the net economic benefits on a present value basis under which the requested tax credit allocation amount is discounted to present value at the same discount rate as the projected benefits from the implementation of the proposed redevelopment project for which an award of tax credits is being sought.
d. (1) For a redevelopment project subject to the requirement of subsection c. of this section to be eligible for any tax credits under the program, a developer shall demonstrate to the authority that the award of tax credits will yield a net positive benefit to the State equaling an amount determined by the authority through regulation that exceeds the requested tax credit amount. The developer shall certify, under the penalty of perjury, that all documents submitted, and factual assertions made, to the authority to demonstrate that the award of tax credits will yield a net positive benefit to the State in accordance with this subsection are true and accurate at the time of submission.
(2) A redevelopment project located in a government-restricted municipality shall yield a net positive benefit to the State that exceeds the requested tax credit amount, but the net benefit requirement set by the authority for such redevelopment projects may be up to [35] 50 percentage points lower than the net benefit requirement set by the authority for all other eligible redevelopment projects.
(3) A commercial project that contains 50,000 or more square feet of space devoted to research or technology focused incubator and conferencing facilities for one or more institutions of higher education or non-profit organizations, and which has a total project cost of not less than $50 million, shall yield a net positive benefit to the State that exceeds the requested tax credit amount, but the net benefit requirement set by the authority for such redevelopment projects may be up to 35 percentage points lower than the net benefit requirement set by the authority for all other eligible redevelopment projects.
(4) A redevelopment project that is predominantly commercial and that receives a federal historic rehabilitation tax credit pursuant to section 47 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.47, or a tax credit pursuant to the "Historic Property Reinvestment Act," sections 2 through 8 of P.L.2020, c.156 (C.34:1B-270 through 34:1B-276), shall yield a net positive benefit to the State that exceeds the requested tax credit amount, but the net benefit requirement set by the authority for such redevelopment projects may be up to 35 percentage points lower than the net benefit requirement set by the authority for all other eligible redevelopment projects.
(5) A commercial project that is located on land owned by the federal government on or before December 31, 2005 shall yield a net positive benefit to the State that exceeds the requested tax credit amount, but the net benefit requirement set by the authority for such redevelopment projects may be up to 35 percentage points lower than the net benefit requirement set by the authority for all other eligible redevelopment projects.
(6) A redevelopment project that is undertaken by a major cultural institution to renovate existing space or expand services into additional space, and in which the major cultural institution realizes all returns from the redevelopment project, shall yield a net positive benefit to the State that exceeds the requested tax credit amount, but the net benefit requirement set by the authority for such redevelopment projects may be lower than the net benefit requirement set by the authority for all other eligible redevelopment projects.
e. If at any time during the eligibility period the authority determines that the developer made a material misrepresentation on the developer's application, the developer shall forfeit the incentive award.
f. If circumstances require a developer to amend its application to the authority, then the developer, or an authorized agent of the developer, shall certify to the authority that the information provided in its amended application is true under the penalty of perjury.
(cf: P.L.2023, c.98, s.4)
4. Section 60 of P.L.2020, c.156 (C.34:1B-328) is amended to read as follows:
60. a. (1) Following approval and selection of an application pursuant to sections 58 and 59 of P.L.2020, c.156 (C.34:1B-326 and C.34:1B-327), the authority shall enter into an incentive award agreement with the developer. The chief executive officer of the authority shall negotiate the terms and conditions of the incentive award agreement on behalf of the State.
(2) For a phased project, the incentive phase agreement shall set forth, for each phase of the project and for the total project, the capital investment requirements and the time periods in which each phase of the project shall be commenced and completed. The awarding of tax credits shall be conditioned on the developer's compliance with the requirements of the agreement. A redevelopment project may be completed in phases in accordance with rules adopted by the authority if the redevelopment project has a total project cost in excess of $50,000,000.
b. An incentive award agreement shall specify the amount of the incentive award the authority shall award to the developer and the duration of the eligibility period. The duration of the eligibility period shall not exceed 15 years for a commercial or mixed-use project and shall not exceed 10 years for a residential project, except that to reduce the total value of tax credits needed to reimburse a developer for all or part of the project financing gap of a redevelopment project, the authority may, in its discretion, approve a duration for the eligibility period that is shorter than the applicable maximum periods. The incentive award agreement shall provide an estimated date of completion and include a requirement for periodic progress reports, including the submittal of executed financing commitments and documents that evidence site control. If the authority does not receive periodic progress reports, or if the progress reports demonstrate unsatisfactory progress, then the authority may rescind the incentive award. If the authority rescinds an incentive award in the same calendar year in which the authority approved the incentive award, then the authority may assign the incentive award to another applicant. The incentive award agreement may also provide for a verification of the financing gap at the time the developer provides executed financing commitments to the authority and a verification of the developer's projected cash flow at the time of certification that the project is completed.
c. [To ensure the protection of taxpayer money, if the authority determines at project certification that the actual capital financing approach utilized by the project has resulted in a financing gap that is smaller than the financing gap determined at board approval, the authority shall reduce the amount of the tax credit or accept payment from the developer on a pro rata basis. If there is no project financing gap due to the actual capital financing approach utilized by the project, then the developer shall forfeit the incentive award. At the end of the seventh year of the eligibility period, the authority shall evaluate the developer's rate of return on investment and compare that rate of return on investment to the reasonable and appropriate rate of return at the time of board approval. If the actual rate of return on investment exceeds the reasonable and appropriate rate of return on investment at the time of board approval by more than 15 percent, the authority shall require the developer to pay up to 20 percent of the amount in excess of the reasonable and appropriate rate of return on investment. The authority shall require an escrow account to be held by the authority until the end of the eligibility period. Following the final year of the eligibility period, the authority shall determine if the developer's rate of return exceeded the reasonable and appropriate rate of return determined at board approval. If the final rate of return does not exceed the reasonable and appropriate rate of return determined at board approval, the authority shall release to the developer the escrowed funds. If the project final rate of return exceeds the reasonable and appropriate rate of return determined at board approval, the authority shall require the developer to pay up to 20 percent of the amount of the excess, which shall include the funds held in escrow, and such funds shall be deposited in the State General Fund.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)
d. The incentive award agreement shall include a requirement that the authority confirm with the Department of Environmental Protection, the Department of Labor and Workforce Development, and the Department of the Treasury that the developer is in substantial good standing with the respective department, or the developer has entered into an agreement with the respective department that includes a practical corrective action for the developer, and the developer shall confirm that each contractor or subcontractor performing work at the redevelopment project: (1) is registered as required by "The Public Works Contractor Registration Act," P.L.1999, c.238 (C.34:11-56.48 et seq.); (2) has not been debarred by the Department of Labor and Workforce Development from engaging in or bidding on Public Works Contracts in the State; and (3) possesses a tax clearance certificate issued by the Division of Taxation in the Department of the Treasury. The incentive award agreement shall also include a provision that the developer shall forfeit the incentive award in any year in which the developer is neither in substantial good standing with each department nor has entered into a practical corrective action. The incentive award agreement shall also require a developer to engage in on-site consultations with the Division of Workplace Safety and Health in the Department of Health.
e. (1) Except as provided in paragraph (2) of this subsection, the authority shall not enter into an incentive award agreement for a redevelopment project that includes at least one retail establishment which will have more than 10 employees, at least one distribution center which will have more than 20 employees, or at least one hospitality establishment which will have more than 10 employees, unless the incentive award agreement includes a precondition that any business that serves as the owner or operator of the retail establishment, distribution center, or hospitality establishment enters into a labor harmony agreement with a labor organization or cooperating labor organizations which represent retail establishment, hospitality establishment, or distribution center employees in the State.
(2) A labor harmony agreement shall be required only if the State has a proprietary interest in the redevelopment project and shall remain in effect for as long as the State acts as a market participant in the redevelopment project. The authority may enter into an incentive award agreement with a developer without the labor harmony agreement required under paragraph (1) of this subsection if the authority determines that the redevelopment project would not be able to go forward if a labor harmony agreement is required. The authority shall support the determination by a written finding, which provides the specific basis for the determination.
(3) (Deleted by amendment, P.L.2023, c.98)
f. (1) Except for a residential project that is located in a government-restricted municipality, and in which 100 percent of the residential units constructed in the residential project are reserved for occupancy by low- and moderate-income households, for a redevelopment project whose total project cost equals or exceeds $10 million, in addition to the incentive award agreement, a developer shall enter into a community benefits agreement with the authority and the county or municipality in which the redevelopment project is located. The agreement may include, but shall not be limited to, requirements for training, employment, and youth development and free services to underserved communities in and around the community in which the redevelopment project is located. Prior to entering a community benefits agreement, the governing body of the county or municipality in which the redevelopment project is located shall hold at least one public hearing at which the governing body shall hear testimony from residents, community groups, and other stakeholders on the needs of the community that the agreement should address.
(2) The community benefits agreement shall provide for the creation of a community advisory committee to oversee the implementation of the agreement, monitor successes, ensure compliance with the terms of the agreement, and produce an annual public report. The community advisory committee created pursuant to this paragraph shall be comprised of representatives of diverse community groups and residents of the county or municipality in which the redevelopment project is located.
(3) At the time the developer submits the annual report required pursuant to section 62 of P.L.2020, c.156 (C.34:1B-330) to the authority, the developer shall certify, under the penalty of perjury, that it is in compliance with the terms of the community benefits agreement. If the developer fails to provide the certification required pursuant to this paragraph or the authority determines that the developer is not in compliance with the terms of the community benefits agreement based on the reports submitted by the community advisory committee pursuant to paragraph (2) of this subsection, then the authority may rescind an award or recapture all or part of any tax credits awarded.
(4) Notwithstanding any requirement of this subsection to the contrary, a developer shall be considered to have met the requirements of a community benefits agreement pursuant to this subsection if the developer submits to the authority:
(a) a copy of either the developer's approval letter from the authority or a redevelopment agreement applicable to the qualified business facility, provided that the approval letter or redevelopment agreement is certified by the municipality in which the redevelopment project is located, and includes provisions that meet or exceed the standards required for a community benefits agreement in this subsection, as determined by the chief executive officer pursuant to rules adopted by the authority; or (b) a resolution adopted by the governing body of the municipality in which the redevelopment project is located, which resolution shall be adopted after at least one public hearing at which the governing body provides an opportunity for residents, community groups, and other stakeholders to testify, and which resolution shall state that the governing body has determined that the redevelopment project will provide economic and social benefits to the community that fulfill the purposes of this subsection, which benefits render a separate community benefit agreement unnecessary, and explain the reasons supporting the governing body's determination.
g. A developer shall submit, prior to the first disbursement of tax credits under the incentive award agreement, but no later than six months following project completion, satisfactory evidence of actual project costs, as certified by a certified public accountant, evidence of a temporary certificate of occupancy, or other event evidencing project completion that begins the eligibility period indicated in the incentive award agreement. The developer, or an authorized agent of the developer, shall certify that the information provided pursuant to this subsection is true under the penalty of perjury. Claims, records, or statements submitted by a developer to the authority in order to receive tax credits shall not be considered claims, records, or statements made in connection with State tax laws.
h. The incentive award agreement shall include a provision allowing the authority to extend, in individual cases, the deadline for any annual reporting or certification requirement.
i. The incentive award agreement shall include one or more provisions, as determined by the authority, concerning the terms and conditions for default and the remedies for the developer of a redevelopment project in the event of default. The incentive award agreement shall not allow the authority to declare a cross-default when the developer of a redevelopment project, including any business affiliate of the developer or any other entity with common principals as the developer, is in default with any other assistance program administered by the authority.
(cf: P.L.2023, c.98, s.6)
5. (New section) a. The rehabilitation or improvements made in the development or redevelopment of a redevelopment project approved pursuant to the provisions of the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through C.34:1B-335), shall be exempt from taxation for a period of five years following the completion of the project. During that time, the land upon which that project is situated shall remain subject to taxation. The exemption shall be allowed after the New Jersey Economic Development Authority has certified to the municipal tax assessor of the municipality wherein the property is situated that a permanent certificate of occupancy has been issued to the developer of the redevelopment project.
b. (1) Before the conclusion of the five-year exemption period set forth in subsection a. of this section, the developer shall enter into a written agreement with the governing body of the municipality wherein the property is situated for the exemption of real property taxation for an additional five-year period, subject to the requirement to provide payments in lieu of tax to the municipality. The agreement shall provide for the developer to pay to the municipality in lieu of full property tax payments an amount annually to be computed in accordance with this subsection.
(2) During the term of the exemption, in lieu of any taxes to be paid on the buildings, improvements, and land of the project, the developer shall make payment to the municipality of an annual service charge, which shall remit five percent of that revenue to the county. In addition, the municipality may assess an administrative fee, not to exceed two percent of the annual service charge, for the processing of the application. The annual service charge for municipal services supplied to the project to be paid by the developer for the period of exemption, shall be determined as follows:
(3) Tax phase-in basis: the agreement shall provide for the applicant to pay to the municipality in lieu of full property tax payments an amount equal to a percentage of taxes otherwise due, according to the following schedule:
(a) in the first full year, no payment in lieu of taxes otherwise due;
(b) in the second full year, an amount not less than 20 percent of taxes otherwise due;
(c) in the third full year, an amount not less than 40 percent of taxes otherwise due;
(d) in the fourth full year, an amount not less than 60 percent of taxes otherwise due;
(e) in the fifth full year, an amount not less than 80 percent of taxes otherwise due.
6. Section 5 of P.L.2005, c.29 (C.40:14B-22.3) is amended to read as follows:
5. a. A county, regional or municipal utilities authority shall establish within its rates or schedules a 50% reduction in the connection fee or tapping fee assessed pursuant to section 21 of P.L.1957, c.183 (C.40:14B-21) for new connections to the water system and a 50% reduction in the connection fee or tapping fee assessed pursuant to section 22 of P.L.1957, c.183 (C.40:14B-22) for new connections to the sewerage system which are to be charged to public housing authorities, [to] non-profit organizations building affordable housing projects, [and to] any other affordable housing, including affordable housing units in inclusionary projects, and the developers of redevelopment projects approved by the New Jersey Economic Development Authority pursuant to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through C.34:1B-335).
b. For units previously connected to the authority's system that were demolished or refurbished to allow for new affordable housing units and for which a connection fee was previously paid, a county, regional or municipal utilities authority shall establish within its rates or schedules a credit against the connection fee or tapping fee to be assessed for connection with the water system or the sewerage system to public housing authorities, non-profit organizations building affordable housing projects, [and to] any other affordable housing, including affordable housing units in inclusionary projects, and redevelopment projects approved pursuant to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 through C.34:1B-335). The credit shall be the connection fee or tapping fee previously assessed and paid for connection with the water system or the sewerage system for units previously connected to the authority's system.
c. The connection fee or tapping fee assessable against a public housing authority, non-profit organization, [or] other affordable housing owner, or developer of a redevelopment project approved by the New Jersey Economic Development Authority pursuant to the "New Jersey Aspire Program Act," sections 54 through 67 of P.L.2020, c.156 (C.34:1B-322 and C.34:1B-335), for units previously connected to the authority's system that were demolished or refurbished to allow for new affordable housing units, including affordable housing units in inclusionary projects, shall be the lesser of the reduced rate provided for in subsection a. of this section, or the current non-reduced rate applicable to other types of housing developments minus the credit provided under subsection b. of this section for units for which a connection fee or tapping fee was previously paid, provided that said public housing authority, non-profit organization, [or] other affordable housing owner, or developer can establish the connection fee or tapping fee was previously assessed and paid for connection with the system. If the same cannot be established, the reduced rate provided for in subsection a. of this section shall be assessed.
(cf: P.L.2018, c.74, s.6)
7. This act shall take effect immediately.
STATEMENT
This bill provides various changes to the New Jersey Aspire Program (Aspire Program), which is administered by the New Jersey Economic Development Authority (EDA) and was enacted as part of the "New Jersey Economic Recovery Act of 2020," P.L.2020, c.156 (C.34:1B-269 et al.).
Under the Aspire Program, the EDA awards tax credits to the developers of certain redevelopment projects, which projects would not be economically feasible absent such subsidies, and which projects meet certain other requirements. In turn, these developers are required to comply with certain additional requirements concerning the development of these projects, including, but not limited to, the dedication of affordable housing in new residential projects.
Government-restricted municipalities
The bill revises the definition of "government-restricted municipality" to expand municipal eligibility to the municipalities of Newark, East Orange, Union City, Elizabeth, New Brunswick, Camden, Vineland, Bridgeton, and Lakewood, in addition to Paterson, Trenton, and Atlantic City.
Net benefits analysis and final award certification
A developer of a redevelopment project applying for an award of tax credits from the EDA is required to demonstrate that providing public assistance to the project will result in a net positive benefit to the State. Currently, the EDA requires each applicant to demonstrate a net positive benefit to the State of 160 percent of the credit amount.
Under current law, certain redevelopment projects, including those located within government-restricted municipalities, may be approved at the authority's discretion while having a net positive economic benefit that is as much as 35 percent less than the standard applied to projects in other locations. This bill would extent this allowance to provide that the EDA may approve projects located in government-restricted municipalities that demonstrate a net positive benefit to the State of up to 50 percentage points less than the standard requirement. As a result, these projects could be eligible for approval by demonstrating a net positive benefit that is 110 percent of the credit amount.
The bill also removes a provision of law that requires the EDA to reduce the overall award of tax credits to a redevelopment project if it is determined, at the time of project certification, that the actual project financing gap is less than the amount initially approved by the EDA.
Option of prevailing wages or a project labor agreement
Under current law, workers
employed to perform construction work at redevelopment projects are required to
be paid no less than the prevailing wage for the worker's craft or trade, as
determined by the Commissioner of Labor and Workforce Development. The bill
provides that a developer of a residential redevelopment project may be exempt
from this requirement if the developer has negotiated and executed a project
labor agreement to provide certain wage protections.
Utility authorities and connection fees for redevelopment projects
Under current law, county, regional, and municipal utility authorities are required to provide reductions in connection fees for new connections to the water system and sewerage system for certain projects, including public housing authorities, non-profit organizations building affordable housing projects, and any other affordable housing projects. The bill extends this provision of law to require county, regional, and municipal utility authorities to provide the same reductions in connection fees for the developers of redevelopment projects under the Aspire Program.
Phased tax abatement for redevelopment projects
The bill also provides for tax exemptions on the improvements from redevelopment projects. Under the bill, for the first five years after a project receives a permanent certificate of occupancy, no tax would be imposed on the improvements on the property. However, the land on which the project is located would continue to be taxed during the first five years. Following the initial five-year period, the developer would be required to enter into an agreement to pay annual payments in lieu of taxation to the municipality for an additional five-year period. Over the course of this five-year period, the payments by the developer of the project shall increase by 20 percent annually.
