In a significant move to streamline its ability to attract and retain business, New Jersey has approved sweeping legislation to consolidate five existing business tax incentive programs. The state anticipates that its new bill package will improve the state’s effectiveness in stimulating economic development and in creating new jobs.
The new legislation is entitled the Economic Opportunity Act. It includes Grow New Jersey which will become the state’s main job creation program. The other feature of the bill will be called Economic Redevelopment and Growth which will be the sole developer incentive provision. The current Business Retention and Relocation Assistance Grants, the Business Employment Incentive and the Urban Transit Hub Tax Credit programs will be phased out.
The Act reduces the threshold for the size of commitment a company needs to make to qualify for tax breaks from 100 new full-time jobs to as low as 10 full-time jobs for technology start-ups or 25 new jobs in targeted industries including transportation, manufacturing, defense, energy, logistics, the sciences, technology and finance.
To meet the legislative requirements, businesses must make a capital investment and commit to job creation or retention. To protect tax payers, the law stipulates that the net benefit to the state must meet or exceed the amount of the incentives provided through its programs. Additionally, if a company does not meet its full-time job creation obligation the state will be able to recoup the incremental financial incentives it paid.
The largest level of incentive is being offered for what is termed “mega projects” or for urban projects located in one of nine transit centers or four cities comprising the Garden State Growth Zone (Camden, Newark, Passaic or Paterson) or in one of the state’s eight southern counties.
The Act allocates $600 million in tax credits through the Economic Redevelopment and Growth provision for residential projects. The bulk of these credits are aimed at stimulating investment in the targeted urban communities and in southern New Jersey.
New Jersey Governor Chris Christie said “The Economic Opportunity Act incentivizes job creation, makes our state more competitive and lets private sector employers know that New Jersey is the place where they should open their doors”
The new law builds on Governor Christie’s commitment to reclaiming New Jersey’s cities. It places emphasis on spurring development and private sector job growth in the state’s four lowest median family income cities. Projects in these cities will have lower eligibility thresholds and higher incentive levels. The cities will also be eligible to offer significant tax abatements for new development. The Governor observed, “Not only will this bill encourage more companies to create jobs throughout New Jersey, it will also give an extra boost to some of our biggest cities.’ He added, “More and better paying jobs are the keys to thriving cities which are vital to the economic well-being of our entire state.”
New Jersey Business and Industry Association President Philip Kirschner said “Locating a facility in the state brings tremendous amounts of capital investment and the economic benefits of job creation that last years into the future. Likewise keeping New Jersey companies from moving to other states is vital to keeping our economy moving forward and protecting the jobs we have.”
Ms. Tracye McDaniel, president of Choose New Jersey, a privately funded organization that markets the state as an attractive business location, stated, “The Act creates powerful incentive programs that will help New Jersey compete in an increasingly competitive battle for jobs and capital investment not only in the United States but around the globe”. She continued, “These new incentives, along with the state’s strong business assets, will move New Jersey in the direction of being one of the top business locations.”
New Jersey is the headquarters for 21 corporations listed in the Fortune 500. It is also the location of 14 of the 20 world’s largest pharmaceutical companies. Its major business sectors include life sciences, technology, finance, logistics and advanced manufacturing. New Jersey is reported to have nation’s highest concentration of scientists and engineers.