Tim Sullivan, the CEO of the state Economic Development Authority — Photo by Edwin Torres/Governor’s Office
By Joshua Burd
The state has approved several key changes to Aspire, the tax credit program for developers, as it looks to expand eligibility and ensure its continued role in affordable housing production.
The new rules, which were adopted Thursday by the state Economic Development Authority, are largely in response to spiking inflation since the gap financing tool was created in 2021, which officials say has offset the potential benefits of the incentive. To that end, the EDA has approved changes including increased per-project caps, expanded eligibility for so-called transformative projects and increased affordability controls for residential units that are supported by Aspire.
The EDA’s board to date has approved 10 projects for more than $500 million in combined Aspire tax credit awards, representing more than 500,000 square feet of commercial space, 490 income-restricted units and 1,040 market-rate units. But officials hope the updates will allow the program, which supports commercial, mixed-use, and residential development, to support an even larger pool of projects that would not otherwise be financially feasible.
“Since launching, the Aspire Program has supported innovative commercial projects like HELIX and affordable and mixed-income residential developments in downtowns across the state, including in Newark and Trenton,” said Tim Sullivan, the authority’s CEO, referring to the landmark Health + Life Science Exchange development in New Brunswick. “The adoption of these new rules will allow the NJEDA to support even more transformative, mixed-use, transit-oriented development which will help revitalize communities and strengthen our economy. Importantly, the rules will strengthen affordable housing, increasing access to hardworking New Jersey families.”
The EDA approved the 10-year, $271 million tax credit package for the HELIX at its February meeting, marking the first Aspire award since the project was created under the New Jersey Economic Recovery Act of 2020. In July, Gov. Phil Murphy signed an update to the Aspire legislation in response to changing economic conditions, making the program more accessible and able to support more projects that will create jobs and housing across the state.
“There are some folks that are eagerly anticipating the new rules, and we’re excited to keep approving projects moving forward,” said Jorge Santos, the EDA’s chief real estate development officer. That includes residential and mixed-income projects, as well as “a handful of projects with significant commercial components.”
“We have a significant pipeline of projects and we are moving as quickly as we can to get them ready for board approval,” he added.
According to the authority, the new rules approved by the board include:
Increased project awards
The state will increase Aspire awards by way of higher caps per project, which comes in response to spiking inflation, supply chain disruptions and rising interest rates. Projects will now be considered under the following:
- 80 percent of eligible costs up to $120 million for Atlantic City, Trenton and Paterson
- 60 percent of eligible costs up to $90 million for 4 percent Low-Income Housing Tax Credit projects, projects in a qualified incentive tract or in a municipality with a Municipal Revitalization Index score over 50 or an enhanced area
- 50 percent of eligible costs up to $60 million for all other eligible projects
- Transformative project caps are subject to the above percentages with a dollar cap of $400 million
The EDA also approved changes to the “transformative project” category, in which proposals must demonstrate special economic importance to New Jersey and leverage the state’s mass transit assets, higher education assets and other economic development assets to attract or retain employers and skilled workers or in targeted industries by providing employment or housing. Updated criteria include:
- Minimum project costs increased from $100 million to $150 million
- Minimum commercial project size remains 500,000 square feet or
- 300,000 square feet in an enhanced area
- 200,000 square feet in Atlantic City, Paterson or Trenton
- 250,000 square feet for film production studios
- Minimum residential project size of 700 newly constructed units
- Minimum mixed-use project of 50,000 square feet plus
- 200 residential units in Atlantic City, Paterson, or Trenton
- 300 residential units in an enhanced area
- 400 residential units in other eligible locations
For a project that includes newly constructed residential units, at least 20 percent of the units must be reserved for low- and moderate-income households, the EDA said. The authority will now require income-restricted units to include a higher minimum number of three-bedroom units and a maximum number of studios and one-bedrooms, ensuring more options for families.
They also include more units for very low-income and low-income households, with the remainder for moderate-income.
The EDA noted that, in line with Murphy and the authority’s commitment to fiscal responsibility and transparency, the Aspire program rules include provisions, such as a gap financing review and excess revenue sharing requirements, to ensure tax credits are awarded responsibly.