By Joshua Burd
The state Economic Development Authority is now accepting applications for commercial construction projects under a relaunched gap financing program.
The agency announced recently that it would allocate $75 million for such projects under the previously expired Economic Redevelopment and Growth program. To that end, developers and businesses with qualified projects can receive an incentive grant reimbursement of up to 30 percent of total eligible costs and up to 40 percent if they are located in Atlantic City, Camden, Paterson, Passaic and Trenton.
The offering comes as state officials continue to develop a series of new incentives under the recently passed Economic Recovery Act of 2020, which will ultimately overhaul New Jersey’s framework of subsidies programs. The EDA has also allocated $125 million for residential projects under the ERG program, which it relaunched in March.
ERG initially expired in June 2019 when its enabling legislation ended, but the lapse also came amid controversy over the growth of the state’s incentives at the time. The EDA, which manages the subsidies, said the new phase of the commercial ERG program is subject to existing ERG regulations and statutes as amended by Economic Recovery Act.
Incentives awarded through the ERG program are not meant to be a substitute for conventional debt and equity financing, the authority said. Before applying, applicants must have the balance of their funding identified or in place or be able to demonstrate that any terms of other financing are reasonable.
Among other requirements, projects must:
- Be predominantly commercial and contain 100,000 or more square feet of retail, office, and/or industrial uses for purchase or lease
- Be located in a qualifying incentive area
- Not have commenced any construction at the site of a proposed redevelopment project prior to submitting an application or demonstrate to the EDA that the project would not be completed otherwise or is to be undertaken in phases
- Demonstrate that a project financing gap exists
- Demonstrate the tax revenues the state will realize from the project will be greater than the incentive being provided
A link to the application and more information is available at https://www.njeda.com/erg.
