Assembly Commerce, Economic Development and Agriculture Committee Statement to Assembly, No. 4300 (May 13, 2024)

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Assembly Commerce, Economic Development and Agriculture Committee statement to Assembly, No. 4300, State of New Jersey, dated May 13, 2024. The committee reports favorably Assembly Bill No. 4300, which provides various changes to the New Jersey Aspire Program administered by the New Jersey Economic Development Authority (EDA). The statement says the bill revises the definition of “government-restricted municipality” to expand eligibility to Newark, East Orange, Union City, Elizabeth, New Brunswick, Camden, Vineland, Bridgeton, and Lakewood, in addition to Paterson, Trenton, and Atlantic City. It also says the bill removes a provision requiring the EDA to reduce an overall award of tax credits if the actual project financing gap is less than the amount initially approved.

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ASSEMBLY COMMERCE, ECONOMIC DEVELOPMENT AND
           AGRICULTURE COMMITTEE

                          STATEMENT TO

                     ASSEMBLY, No. 4300

       STATE OF NEW JERSEY
                             DATED: MAY 13, 2024

          The Assembly Commerce, Economic Development and
      Agriculture Committee reports favorably Assembly Bill No. 4300.
          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 extend 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.
                                     2

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
    This bill revises the definition of the term “project cost,” for the
purposes of the program, to provide that an additional amount, not to
exceed 20 percent of the total project cost for costs not directly related
to construction, may only be included with respect to the cost of
infrastructure improvements. The bill also provides that, for purposes
of the definition of “project cost,” capitalized interest paid to third
parties is deemed to be costs directly related to construction.
    The bill also amends the definition of “project cost” to include the
funding of a debt service reserve fund.

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.


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