Grow NJ Tax Credits Presented by Mike McCann Principal Garden - PowerPoint PPT Presentation

Grow NJ Tax Credits Presented by Mike McCann Principal – Garden State Incentives

Garden State Incentives Group (GSIG) is a leader in Who is GSIG? securing and managing a variety of tax credits and grants. Experience is the key and we have been doing this since 1997

NJ ECONOMIC OPPORTUNITY ACT of 2013 • Modified and expanded the Grow New Jersey (Grow NJ) and Economic Redevelopment (ERG) and Growth Programs. • 2014 Amendment improved incentives for projects in Atlantic City.

Grow NJ Program • Grow NJ program is broadly aimed at industrial, commercial and office projects, and excludes retail facilities. • The prior Grow NJ Program required minimum $20,000,000 investment and 100 full-time jobs. • The value of the tax credits is limited to $5,000 per employee with bonuses that would allow the credit to reach $15,000 per employee.

GROW NJ – Expanded Incentive Areas Areas in which Grow NJ incentives are available: • PA 1 and PA 2 • Garden State Growth Zones (Camden, Trenton, Passaic, Patterson) • Distressed Municipalities • Urban Transit Hubs • Growth or redevelopment areas in State Development and Redevelopment Plan, the Meadowlands, the Pinelands, the Highlands, or BRACC land

GROW NJ Capital Investment • Capital investment requirement is a cost per square foot. • Site preparation, construction, furnishings, or equipment. • GROWTH ZONE: Site acquisition (within 24 months) and soft costs. • Investment by the owner, landlord or the seller.

ERG PROGRAM • ERG grants - used by developers of retail projects who are not eligible for Grow NJ financing. • Grants to reimburse developers for all or a portion of the project costs that remain to be financed after all other sources of capital have been accounted for (“Project Financing Gap”). • Payments are made to the developer from revenue received by the State over 20 years. • NJEDA must find that the revenue to be generated to the State by the project will exceed the amount necessary to reimburse the developer for the Project Financing Gap.

ERG – Retail / Commercial • The ERGG program requires developers to provide at least 20% of the total project cost. • An incentive grant of up to 30% of the total project costs may be awarded for a term of up to 20 years. • In Camden, an incentive grant of up to 40% of the total project costs may be awarded for a term of up to 20 years.

ERG - Qualified Residential Projects • $600,000,000 has been allocated to tax credits for QRP. • $250,000,000 of that amount has been allocated for qualified residential projects located in South Jersey. • Of that amount, $175,000,000 has been allocated to Camden and Atlantic City. • $75,000,000 has been allocated to other South Jersey municipalities with an MRI of 400 or higher.

Application Deadlines • Applications for Grow NJ tax credits is July 1, 2019. • Project must be completed within 3 years. EDA can grant two 6-month extensions. • Applications for ERG grants must be filed by July 1, 2019. • Applications for a QRP must be filed by July 1, 2016, and the developer must obtain a temporary certificate of occupancy for the project no later than July 28, 2018.

Original Application to EDA: Time Frame: 30 – 90 days, depending on company size • Actions: Contact the NJEDA to discuss the program, • Step by Step than fill out application. The bigger the company, the longer the process. Requires Economic Impact Analysis. Application Approval by NJEDA: Time Frame: 45 – 60 days • Actions: Depending on your preparedness & • completeness – Signed by Governor at monthly board meeting Executed Approval Letter: Time Frame: 60 Days • Actions: None at this point • Required Investments: Time Frame: 12 to 24 months (depending on move in • or build out) Actions: Find space, find vendors, build (could take a lot • longer), terminate existing lease, etc. If less jobs than projected on original application: Time Frame: 30 Days Amendment • Actions: Cost Benefit analysis updated •

Buy/Sell Purchase Agreement: Step by Step Time Frame: 90-120 Days • Actions: start this before you complete, line up • potential buyers and start drafting agreement in advance of completion State EDA Grow Buy-Sell Purchase Green Building Standard Agreement: Requirement: Time Frame: Concurrent with above • Time Frame: 30 to 60 Days • Actions: None • Actions: Need plan approval from NJEDA and • internal agent of their choosing to review this Tax Clearance Certificates: Occupancy Certificate: Time Frame: 45 – 60 Days • Actions: for Buyer, once you ID buyer, have them Time Frame: 30 Days • • get this to clear up any issues and get certificate. Actions: Need to get Business Permit from town, • Need to have this when you submit application. can do this at same time Transfer Application Submitted and Project Completion Certificate: Approved: Time Frame: 30 Days • Time Frame: 30 Days Actions: Need CPA to provide this, need to pre • • plan this 30 days in advance Actions: None • Receipt of Actual Certificate: Payment: Time Frame: 30 Days Time Frame: 15 – 45 Days • • Actions: None Actions: Depending on direct use • •

Overall Timeline Your company is ready to apply and make the move, but how long until we see the incentives? There is no short answer, since each group is different. Budget 14 to 36 months!

The cost of Business & Growth • Capex Min, depends on project, average is 2% of project total. • Approval Fee .5% of Award, not to exceed $500k- Due upon execution of NJEDA Agreement. • Tax Clearance $75/200 if expedited per renewal. • Tax Credit Cert Issuance Fee .5% of Award, not to exceed $500k-due upon receipt of tax credit. • Annual Service Fee 2% of Annual Tax Credit-due upon filing of annual compliance. • Annual Audit Expenses: $2k - $20k per year

• Tax credits are not Selling: who liquid assets, like a stock or a bond. and when? • Tax Credits will never have a value over its face value. • Tax credits are either Transferrable or Non– Transferrable. • Transferrable credits can be sold to another purchaser, which is determined by the law creating the tax credit.

Who buys tax credits? • Finding a group to purchase is not an easy task. • Garden State Incentives will match your tax incentives with the best buyer.

GSIG’s Financial Option How can I leverage my credits into cash for: • Early capital • Fee payments GSIS works hand in hand with businesses to make this happen.

For additional information please contact Mike McCann Email: grownj@gardensi.com Phone: 856-409-5761