Assembly Commerce, Economic Development and Agriculture Committee Statement to Assembly, No. 5470 (2025)

Summary

An Assembly Commerce, Economic Development and Agriculture Committee statement to Assembly, No. 5470, State of New Jersey, dated November 24, 2025, reporting the bill favorably with committee amendments. The bill modifies the "New Jersey Aspire Program" for institutional projects tied to Research 1 (R1) or Research 2 (R2) institutions of higher education and for distressed hospital projects. A distressed hospital project would be eligible for an incentive award equal to 85 percent of project costs and an institutional project for 80 percent, each limited to a maximum value of $120 million. The developer of an institutional project would contribute capital of at least $30 million, while distressed hospital projects would be exempt from that requirement and from the net benefit analysis. As amended, the bill is identical to Senate Bill No. 4135 (1R).

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ASSEMBLY COMMERCE, ECONOMIC DEVELOPMENT AND AGRICULTURE
COMMITTEE

STATEMENT TO

ASSEMBLY,
No. 5470

with
committee amendments

STATE
OF NEW JERSEY

DATED: November
24, 2025

The Assembly Commerce, Economic Development and
Agriculture Committee reports favorably and with committee amendments Assembly
Bill No. 5470.

As amended, this bill modifies certain provisions of
the “New Jersey Aspire Program” (Aspire Program) related to the construction of
institutional projects and distressed hospital projects.

Under the bill, the term “institutional project” is
defined as a redevelopment project that is developed by, or in affiliation
with, an institution of higher education with a research activity designation
of Research 1 (R1) or Research 2 (R2) from the Carnegie Classification of
Institutions of Higher Education, and for which at least 51 percent of the
square footage of the project is dedicated for the use of qualified research
and development. “Qualified research and development” is defined as research
and development activities that are undertaken within a priority industry,
including, but not limited to, technology, artificial intelligence, software
development, financial services, financial services technology, film and
digital media, advanced manufacturing, gaming, pharmaceuticals, biotechnology,
transportation, logistics, and renewable energy.

The bill defines a “distressed hospital project” as a
health care or health services center, hospital, or hospital system that: (1)
operates a minimum of four general acute care hospitals licensed by the State;
(2) incurred average annual expenses not less than $250,000 for the provision
of charity care services, not including the value of charity care subsidies or
reimbursements received through any governmental assistance program, as
measured by the five most recent calendar years, immediately preceding the date
of application for the program, for which audited financial statements are
available; (3) and is owned or leased by an organization that is exempt from
federal taxation pursuant to section 501(c)(3) of the federal Internal Revenue
Code, including any wholly-owned subsidiary of an exempt organization, which
organization or subsidiary has filed a bankruptcy petition pursuant to Title 11
of the United States Code.

The bill modifies the calculation of “project costs”
for distressed hospital projects and institutional projects. For a distressed
hospital project, the bill authorizes the inclusion of land costs, in an amount
not to exceed 20 percent of the eligible project cost, within the calculation
of “project cost.” The bill also requires the calculation of the “project
cost” of an institutional project to include the construction and completion
of: research workspaces; meeting, classroom, dining, and dormitory spaces; and
common areas, including, but not limited to, hallways, utility rooms, storage
areas, and parking components.

The bill also makes certain changes related to the
requirement for the developer of a redevelopment project to commit capital for
the project. Under current law, the developer is required to contribute
capital of at least 20 percent of the total project costs, except that if the
project is located in a government-restricted municipality, the developer only
is required to contribute capital of at least 10 percent of the total project
cost. Instead, the bill provides that the developer of an institutional project
is required to contribute capital of at least $30 million, regardless of the
overall cost of the project, except when the project is located in a
government-restricted municipality. The bill also exempts the developer of a
distressed hospital project from this requirement.

Additionally, the bill permits the developer of a
distressed hospital project to elect an eligibility period not to exceed five
years, rather than require an eligibility period not to exceed 10 years for
such a project. The bill also exempts distressed hospital projects from
certain requirements of the Aspire Program, including: (1) the evaluation of
the project’s rate of return on investment and related requirements, including
a requirement that a developer pay up to 20 percent of the amount in excess of
the reasonable and appropriate rate of return on investment; and (2) the
requirement to enter into a community benefits agreement for certain projects
whose total project cost equals or exceeds $10 million.

The bill requires the authority to rescind an award
and recapture all or part of any tax credits awarded, including all or part of
any tax credits claimed by the developer, if a distressed hospital project
ceases to operate any general acute care hospital during the eligibility
period.

The bill also increases the amount of tax credits that
may be awarded to a distressed hospital project or institutional project in
most circumstances. Under the bill, a distressed hospital project is eligible
for an incentive award equal to 85 percent of project costs, which incentive
award is limited to a maximum value of $120 million. The bill provides that an
institutional project is eligible for an incentive award equal to 80 percent of
project costs, which incentive award is limited to a maximum value of $120
million.

The bill provides that an institutional project or a
distressed hospital project is not subject to the net benefit analysis that is
required for certain other redevelopment projects. Under current law, an
exemption from the net benefit analysis is only provided for investments in
residential projects, food delivery sources, and health care or health services
centers.

The bill also provides similar changes for
institutional projects or distressed hospital projects that qualify as
transformative projects under the Aspire Program. Under the bill, a distressed
hospital project is required to include 200,000 or more square feet to qualify
as a transformative project. The bill exempts qualified institutional projects
and distressed hospital projects from the net benefit analysis requirement for
transformative projects.

The bill also exempts distressed hospital projects
that are transformative projects from requirements that the authority review
the project financing gap and re-evaluate the developer’s rate of return at
certain intervals. The bill provides that distressed hospital projects are
eligible for an incentive award equal to 85 percent of project costs. Under
the bill, institutional projects are eligible for an incentive award equal to
80 percent of project costs. A transformative project of either type is eligible
for an incentive award valued at up to $400 million or the amount of the
project financing gap.

As amended and reported by the committee, Assembly
Bill No. 5470 is identical to Senate Bill No. 4135 (1R), which was also amended
and reported by the committee on this date.

COMMITTEE AMENDMENTS :

The committee amended the bill to:

(1) define a “distressed hospital project” to mean a
health care or health services center, hospital, or hospital system that:
operates a minimum of four general acute care hospitals licensed by the State;
incurred average annual expenses not less than $250,000 for the provision of
charity care services, not including the value of charity care subsidies or
reimbursements received through any governmental assistance program, as
measured by the five most recent calendar years, immediately preceding the date
of application for the program, for which audited financial statements are
available; and is owned or leased by an organization that is exempt from
federal taxation pursuant to section 501(c)(3) of the federal Internal Revenue
Code, including any wholly-owned subsidiary of an exempt organization, which
organization or subsidiary has filed a bankruptcy petition pursuant to Title 11
of the United States Code;

(2) change the definition of "institutional
project" to include a requirement that the redevelopment project be
developed by, or in affiliation with, an institution of higher education with a
research activity designation of Research 1 (R1) or Research 2 (R2) from the
Carnegie Classification of Institutions of Higher Education;

(3) permit the developer of a distressed hospital
project to elect an eligibility period not to exceed five years, rather than
require an eligibility period not to exceed 10 years for such project;

(4) include land costs, in an amount not to exceed 20
percent of the eligible project cost, within the project cost of a distressed
hospital project;

(5) exempt the developer of a distressed hospital
project from the requirement to contribute capital based on a minimum percent
of the total project cost. Under current law, a developer is required to
contribute capital of at least 20 percent of the total project cost, with
certain exceptions;

(6) exempt distressed hospital projects from the
required evaluation of the project’s rate of return on investment and related
requirements, including a requirement that a developer pay up to 20 percent of
the amount in excess of the reasonable and appropriate rate of return on
investment;

(7) exempt a distressed hospital project from the
requirement to enter into a community benefits agreement for certain projects
whose total project cost equals or exceeds $10 million;

(8) require the authority to rescind an award and
recapture all or part of any tax credits awarded, including all or part of any
tax credits claimed by the developer, if a distressed hospital project ceases
to operate any general acute care hospital during the eligibility period;

(9) provide that the developer of a distressed
hospital project is to receive a total tax credit not to exceed 85 percent of
the eligible project costs, which value is not to exceed $120 million;

(10) provide that a distressed hospital project that
includes 200,000 or more square feet may qualify as a transformative project.
These transformative projects would receive a total tax credit not to exceed 85
percent of the eligible project costs, subject to the existing aggregate
limitations for all other transformative projects;

(11) exempt distressed hospital projects that are
transformative projects from the requirement that the authority review the
project financing gap and re-evaluate the developer’s rate of return at certain
intervals;

(12) exempt distressed hospital projects, including
those that are transformative projects, from the net benefit test otherwise
required under current law; and

(13) provide technical changes to the bill, including
updating underlying statutory language to reflect recent enactments of law.

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