By Joshua Burd
The state Economic Development Authority is now accepting applications for the jobs-based tax incentive known as Emerge, the long-awaited successor to the Grow New Jersey program.
Created under the Economic Recovery Act of 2020, the offering will provide employment-based tax credits as high as $8,000 per job annually. The incentive follows in the footsteps of a program that expired two years ago, filling a void for office users and other companies that had helped drive activity in the commercial real estate market.
The Emerge program will make tax credits available to projects that invest private capital into the state and create good-paying jobs, with a focus on certain priority sectors, according to the EDA. Gov. Phil Murphy, who signed the Economic Recovery Act in January, hailed the program as a key step toward creating jobs across all demographics.
“It is even more important as we begin our recovery from the economic devastation of the COVID-19 pandemic,” Murphy said. “The Emerge program is a well-crafted, targeted tax incentive program that will drive job creation and equitable economic growth throughout New Jersey.”
Through the Emerge program, small and large businesses, as well as nonprofits, can apply for tax credits to support projects that meet minimum capital investment and minimum job creation or retention requirements, according to a news release. Base tax credits will range from $500 to $4,000 per job, per year, depending on location and other aspects of the project, with bonuses available based on project location, industry and alignment with other policy objectives that can increase annual awards to a maximum of $8,000 per job.
Most projects will receive tax credits over a seven-year eligibility period, starting after the EDA confirms the applicant has completed its investment and hired workers.
“Launching the application for the Emerge program is a major step forward that will open the door to exciting new economic development projects while also remaining true to our commitments to equity, transparency and accountability,” said Tim Sullivan, the authority’s CEO. “This will set New Jersey on the path to long-term, sustainable, and fair economic success.”
The agency outlined additional details of the program:
- Projects with significant numbers of retained jobs — either 500 or 1,000 depending on the project’s location — can receive tax credits for retained jobs, although the legislation sets the amount of tax credits for each retained job at half the amount that would be awarded for equivalent new jobs. Jobs that are covered by what’s known as a labor harmony agreement are eligible for an additional $1,000 bonus over the capped amounts.
- To be eligible for tax credits under the Emerge program, projects must create at least 35 new full-time jobs. That job creation requirement is lower if a business is primarily engaged in a targeted industry or if a business meets the definition of a “small business” in the program rules.
- Additionally, at least 80 percent of incented employees’ work time must be spent in New Jersey, and the business must commit to stay in the incented location for at least 1.5 times the duration of the tax credit period. Projects may make an equivalent donation to a local Recovery Infrastructure Fund in place of investing in their project’s facility. Some requirements are relaxed for small businesses.
- All projects that receive tax credits under Emerge must meet minimum environmental standards, meet prevailing wage obligations for all construction workers and building service workers and provide health care for employees. Projects that have a total cost of $10 million or more are also required to enter into a so-called Community Benefits Agreement with the EDA and the municipality or county in which the project is located, with the goal of monitoring compliance.
- To ensure a strong return on investment for New Jersey taxpayers, projects that receive tax credits under the Emerge program must yield a minimum net positive economic benefit to the state of 200 to 400 percent depending on project location, while awards will be limited to the amount the EDA determines is necessary to induce the project to locate in New Jersey. The authority will also review detailed financial information about the project to verify the award of tax credits is a “material factor” in the decision to create or retain jobs in New Jersey.
The EDA noted that the Emerge program is capped with the Aspire program — a separate incentive designed to catalyze community redevelopment and provide gap financing — at $1.1 billion over six years. Any remaining tax credits left after those six years will be available in a seventh year.
To ensure the benefits are distributed equitably throughout the state, the Emerge and Aspire program cap is split between northern and southern counties for the first three years.
The complete rules for the Emerge program, including eligibility, award sizes and other information, are available at https://www.njeda.com/emerge.
“New Jersey’s recovery from COVID-19 hinges in large part on our ability to attract and retain businesses to the state and create good jobs for New Jersey residents,” said state Sen. Paul A. Sarlo, who serves as chairman of the Senate Budget and Appropriations Committee. “The Emerge Program is a critical economic development tool that will bring successful businesses to New Jersey, incentivize them to create jobs for New Jersey residents and promote expanded economic opportunities.”
Emerge is one of several new incentives created under the Economic Recovery Act, following a multiyear controversy over Grow New Jersey and other tax credit programs that proliferated under Gov. Chris Christie. Other new subsidies include incentives for new construction and for revitalizing brownfields and historic properties, along with financial resources for small businesses, support for new supermarkets and healthy food retailers in so-called food deserts, new funding opportunities for early-stage companies in New Jersey and support for the growing film and digital media industry.
Other key state officials praised the rollout of the program:
Sen. M. Teresa Ruiz:
“As we begin the process of recovering from the COVID-19 pandemic, we have an important opportunity to build a more prosperous and equitable employment landscape in New Jersey. The Emerge program will play a key role in our economic recovery by driving job creation and economic growth in impacted communities throughout the state.”
Assembly Speaker Craig Coughlin:
“The only way for New Jersey to fully recover from the COVID-19 pandemic and the associated economic impacts is to drive job creation and economic growth in communities throughout the state. The Emerge program is a thoughtfully-crafted incentive that will effectively support business growth in New Jersey while also creating a more fair and equitable economy where all New Jerseyans can succeed.”
Assemblywoman Eliana Pintor Marin:
“The launch of the Emerge program application is an important step in the process of moving from short-term responses to the immediate COVID-19 crisis to long-term, forward looking programs that will drive recovery and economic growth. By focusing on job creation, this program responds directly to the need to get New Jerseyans back to work while also attracting successful, growing companies that will serve as engines of economic growth for years to come.”