Tagged: Tax Credits

Update: U.S. Treasury Approves New Jersey’s Opportunity Zones

As we had previously written, the Murphy Administration recently recommended 169 census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. The Treasury Department has now approved Governor Murphy’s recommendations. A list of the Opportunity Zones and an interactive map showing the Zones can be found through the New Jersey Department of Community Affairs. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for...

New Jersey Picks Its Opportunity Zones

The Murphy Administration announced it has recommended census tracts within 75 New Jersey towns to the U.S. Department of Treasury for inclusion in the newly-created federal Opportunity Zones Program. Championed by Senators Cory Booker (D-NJ) and Tim Scott (R-SC), the 2017 tax reform law incorporated the Opportunity Zones Program to provide federal community development tax incentives and encourage long-term investment in eligible census tracts. The Program allows investors to temporarily defer payment of federal income tax on realized gains if the gains are invested in a qualified Opportunity Fund within 180 days of the date of the particular taxable sale or exchange. In addition, when a taxpayer disposes of an investment in a qualified Opportunity Zone held by the taxpayer for at least 10 years, the taxpayer can elect to exclude from gross income the capital gain on the investment in the Opportunity Zone Fund. A qualified Opportunity Fund is an investment vehicle that is organized as a partnership or a corporation for the purpose of investing in Opportunity Zone Property. Eligible Opportunity Zone Property generally includes (i) stock in a domestic corporation; (ii) any capital or profits interest in a domestic partnership; and (iii) tangible property used in a trade...

Governor Murphy Delivers Fiscal Year 2019 Budget Address

Governor Phil Murphy delivered his first budget address to the New Jersey State Legislature on Tuesday, March 13th. The Governor’s proposed Fiscal Year (FY) 2019 Budget totals $37.4 billion, which is a $2.7 billion increase from the $34.7 billion spending plan enacted in Fiscal Year 2018. The Governor stated that the proposed FY 2019 Budget is “realistic and responsible,” affirms New Jersey’s values, and will begin the process of returning New Jersey to being a “good value for good money.” To accomplish this, Governor Murphy is proposing to: Increase public school spending by $341 million in FY 2019 with the goal of reaching full funding in four years; Invest an additional $83 million in pre-K this year and start a four-year expansion of a statewide program; Make community college tuition free for all in three years by investing an additional $50 million this fiscal year; Add 3,500 new Tuition Aid Grant awards; Triple funding for New Jersey Transit with an additional $242 million in investment; Increase the Earned Income Tax Credit from 35 percent to 40 percent over three years; Provide $3.2 billion in payments to the state pension system; Increase the minimum wage to $11 per hour for state...

What’s a “Pocket Veto” Anyway? – A Guide to the End of New Jersey’s 217th Legislative Session

At noon on January 9, 2017, the New Jersey Legislature’s 217th session comes to a close. That means any bill not presented to the Governor for his consideration before then will become moot and must be reintroduced in the 218th session. But certain constitutional rules also apply to bills passed by the Legislature and presented to the Governor in the last days of the session. During the two year legislative cycle, the New Jersey Constitution (Art. V, §1, ¶14(b) and (c)) allows the Governor 45 days to either sign the bill or veto it, with the veto being either absolute or conditional. This time frame can be extended if the house of origin (the Senate or General Assembly) is not in session on the 45th day. If the Governor takes no action within the allotted time, the bill becomes law. Any bill presented to the Governor on or after November 25, 2017, cannot receive 45 days of consideration before the end of the session on January 9, 2018. The New Jersey Constitution (Art. V, §1, ¶¶14 (c) and (d)) provides special procedures for this situation: Any bills presented on November 25, 2017, must be signed by noon on January 9, 2018, or...

NJEDA Proposes Readoption and Changes to Administrative Rules

Notwithstanding recent headlines about attempts to “kill” off the New Jersey Economic Development Authority (NJEDA), reports of the NJEDA’s death are greatly exaggerated. On November 20, 2017, the NJEDA proposed for readoption with amendments the administrative rules for its assistance programs. This includes changes to the Grow NJ Assistance Program (the “Grow NJ Program”) that implement the recently enacted law creating incentive areas around colleges and universities; modifications to the submission dates for the Economic Redevelopment and Growth Program (the “ERG Program”); and revisions to the Angel Investor Tax Credit Program (the “Angel Investor Program”). Interested parties may submit written comments by January 19, 2018. The NJEDA is an independent State agency that finances small and mid-sized businesses, administers tax incentives to retain and grow jobs, revitalizes communities through redevelopment initiatives and supports entrepreneurial development by providing access to training and mentoring programs. We have previously written about some of the NJEDA’s programs, and the most important proposed changes to the NJEDA’s program rules are listed below. Grow NJ Grow NJ encourages economic development and job creation by offering tax credits to businesses looking to relocate to the State, or that are currently located in New Jersey but are in danger of...

N.J.’s Proposed Changes to Low Income Housing Tax Credit Qualified Allocation Plan Limit Projects per Developer and Encourage Development in Smart Growth Areas

The N.J. Housing and Mortgage Finance Agency (“HMFA”) recently proposed changes to the Low Income Housing Tax Credit (“LIHTC”) Qualified Allocation Plan (“QAP”). State housing credit agencies, like HMFA, are required to create plans which outline the selection criteria for awarding tax credits for the development of low- and moderate-income housing. The proposed amendments update the QAP to reflect procedural changes to the way in which affordable housing is constructed, but also include some substantive changes to both the allocation of tax credits among developers and the scoring system for awarding tax credits. To review the full proposed changes to the QAP, as well as the agency analysis of the impact of these proposals, please click here. Comments on these proposed changes are due no later than December 2, 2016. Allocation of Tax Credits Two changes are proposed regarding the allocation of tax credits to municipalities, and the allocation of funded tax credit projects among developers. Currently, the QAP encourages the equitable distribution of tax credits throughout the State by capping the number of awards per municipality at two per year. HMFA proposes increasing this number to three awards annually for those municipalities that have a population of 100,000 or...

Are New Jersey’s Business Loan, Incentive, and Grant Programs Right for You?

Ronald Reagan famously said that the nine most terrifying words in the English language are, “I’m from the government and I’m here to help.” But for businesses starting up, expanding, or relocating into New Jersey, state government can be helpful, if you know where to start. We regularly counsel clients on government incentives, loans, and business assistance offered through the nationally-recognized New Jersey Economic Development Authority (NJEDA) and other State agencies. The NJEDA’s programs assist businesses of all sizes access loans/loan guarantees, as well as business and tax incentives. A few of the many programs offered are listed below. Loan Programs The NJEDA offers several loan programs that support small and mid-sized companies acquiring fixed assets, obtaining working capital, and refinancing debt: The Premier Lender Program provides loan and line of credit participations/guarantees in varying amounts. The NJEDA has a group of preferred lenders, and rates are generally at or below traditional loans. In return for the NJEDA’s assistance, the business has to agree to add one new full-time employee for every $65,000 of NJEDA exposure. The Small Business Fund provides up to $500,000 for small businesses, minority or woman owned businesses, and nonprofits that have been in business for...

Innovation Brewing in the New Jersey Legislature

Every summer, New Jersey legislators travel to the annual conferences of the National Conference of State Legislators (“NCSL”), the Council of State Governments (“CSG”), and the American Legislative Exchange Council (“ALEC”) to educate themselves about policy innovations occurring throughout the United States. While we wait to learn about their experiences, right now is a good opportunity to focus on innovative legislation currently before the New Jersey Legislature. As of August 15, 2016, 7,068 bills have been introduced in the New Jersey Legislature, 4,379 in the Assembly and 2,689 in the Senate, and only 87 have been signed into law. The following list of bills currently in committee represent examples by legislators looking to encourage innovation in New Jersey: S158 (Madden)/A3631 (Quijano) would promote investment in New Jersey by broadening the types of New Jersey emerging technology businesses that are eligible to receive investments under the New Jersey Angel Investor Tax Credit Act; A3187 (Munoz)/ S948 (Singer) would create a program within the New Jersey Economic Development Authority that would create a pathway to the commercial market for technology developed at a New Jersey college or university. Under this legislation, New Jersey would stimulate the economy while recapturing the state’s investment...

Privately Financing the Public Good: Using Public-Private Partnerships to Inject Private Financing into Public Projects in New Jersey

New Jersey has a higher inventory of worthy infrastructure projects than it has money to fund sorely needed improvements. Although New Jersey has the seventh highest revenue of any state, the pressures of being a densely populated commuter state often impose significant liabilities on those revenues such that the State is often faced with having to choose between worthy projects because available financing is limited. One common sense solution gaining significant traction is the injection of private financing into public projects in order to relieve some of the State’s financing burdens. Often referred to as public-private partnerships or P3s, these agreements trade a limited, future revenue stream over time to a private corporation in exchange for a fiscal commitment allowing a project to put shovels in the ground. These projects can take various forms: construction of state college dormitories in exchange for rents, maintenance of highways in exchange for availability payments, or construction of a bridge in exchange for toll rights, to name a few. The State entity receives an influx of capital to address infrastructure needs and the private entity receives a long term profit from rents, tolls, availability payments, or maintenance agreements. The elegance of this type of...

Governor Christie Acts on BEIP Conversion Tax Credit Payment Changes

On June 30, 2016, Governor Christie signed to law Senate Bill 2376/Assembly Bill 4002, which modifies the tax credit payment schedule for Business Employment Incentive Program (“BEIP”) Grant recipients converting their cash grants to tax credits. The Legislature and Governor enacted a law in January allowing businesses to convert outstanding BEIP Grants into tax credits. The law provided that BEIP Grants accrued but not paid during years 2008-2013 were to be redeemable as tax credits over a five-year period starting in the 2017 tax accounting or privilege period of the business. S-2376/A-4002 revises the tax payment credit schedule so that only 5 percent of the tax credit is redeemable in 2017. Twenty percent would be redeemable in 2018, with 25 percent redeemable in years 2019, 2020, and 2021. The change was required due to the projected budgetary shortfall in Fiscal Year 2017, which the State Treasurer announced on May 18, 2016. If your business is still considering a BEIP conversion, the deadline to opt-in is the close of business on July 11, 2016. Gibbons can assist your company with the process of evaluating and implementing a conversion. Paul J. St. Onge, a Director in the Gibbons Government Affairs Department, and...