The statehouse in Trenton
By Joshua Burd
The state’s Economic Development Authority is now accepting applications for Aspire, its new place-based gap financing program for commercial and residential projects.
The subsidy, part of a package of new incentives championed by Gov. Phil Murphy, will be available to developers building near transit hubs, providing affordable housing or advancing other public policy objectives in New Jersey. Developers can now apply for tax credits under the program that would essentially cover a percentage of a project’s eligible costs, subject to a cap that is determined by location, other financing available and other aspects of the proposal.
Most projects are eligible for awards of up to $42 million, but those that meet specific criteria may receive tax credits as high as $60 million, according to a news release. Additionally, projects that meet certain parameters can qualify as “transformative projects,” enabling them to receive tax credits up to $350 million.
Aspire is essentially taking the place of the well-known Economic Redevelopment and Growth program, the gap financing tool under the state’s previous generation of incentives.
“The Aspire program will help to advance new housing and commercial development projects throughout the state, with a focus on communities that have long been overlooked,” Murphy said. “New Jersey’s economy is rebounding, and housing is in high-demand. Our administration has long prioritized transit-oriented development, affordable housing, and other projects of public interest, and we will continue to do so under the Aspire program.”
According to the EDA, so-called transformative projects must have eligible costs of at least $100 million and be at least 500,000 square feet or up to 250,000 square feet in the case of proposals involving film studios. Such projects must also demonstrate special economic importance to New Jersey and leverage the state’s mass transit, higher education and other economic development assets to attract or retain employers and skilled workers.
To that end, the authority is offering a mapping assistant to help potential applicants determine if their proposals are eligible to participate in the Aspire program, including whether they may qualify for the transformative designation.
“Gov. Murphy’s economic development strategy is focused on attracting investment to underserved communities and revitalizing our urban centers and places served by transit,” said Tim Sullivan, the EDA’s chief executive. “With the new Aspire program, we look forward to helping to catalyze a series of mixed-use, transit-oriented, mixed-income and affordable housing projects that advance important administration economic and social goals.”
To be eligible for Aspire tax credits, a project must be located in an eligible incentive location, which may include metropolitan and suburban areas designated by the State Plan, an aviation or port district or other designated centers that are within a half-mile of a rail transit station or a high-frequency bus stop, the EDA said. Film production projects anywhere in the state may be eligible for a subsidy under the program.
The authority also detailed other thresholds, including the need for at least 100,000 square feet of retail or commercial space in commercial projects. Residential projects, meantime, must have eligible project costs totaling $5 million to $17.5 million, depending on location.
“The Aspire program applicants with affordable housing components will also be eligible for Low-Income Housing Tax Credits, which are issued by the New Jersey Housing and Mortgage Finance Agency,” said Melanie R. Walter, the agency’s executive director. “These two programs can be leveraged to advance the state’s priorities through the development of transformative mixed-income, mixed-use projects.”
In addition to meeting the baseline eligibility requirements, applicants must be in substantial good standing with the state departments of Labor & Workforce Development, Environmental Protection and Treasury. The new guidelines also include provisions geared toward fiscal responsibility and transparency, seeking to guard against the concerns that stoked controversy under the state’s previous generation of incentives.
Meantime, applicants must provide a letter of support from the governing body of the municipality or municipalities in which the project is located, while proposals with an eligible cost equaling or exceeding $10 million must also enter into a so-called Community Benefits Agreement with the authority and relevant jurisdictions. The EDA added that projects including newly constructed residential units must set aside at least 20 percent for occupancy by low- and moderate-income households.
Murphy and state lawmakers created Aspire as part of the New Jersey Economic Recovery Act of 2020, which the governor signed into law early last year.
“Aspire will help generate greater investment in our communities by providing enhanced incentives for projects in distressed municipalities, including the creation of affordable housing and returning long-dormant sites to productive use,” said state Sen. M. Teresa Ruiz, the prime sponsor of the law. “Aspire exemplifies the ERA’s core principles of responsible investment, greater oversight and tangible community benefits.”
Collectively, projects under Aspire and the new jobs-based Emerge incentive are subject to a cap of $1.1 billion per year in tax credit awards for each of the first six years of the programs, with the cap split between northern and southern counties, the EDA said. Unused amounts may be carried forward each year, while any remaining unused tax credits are available in the seventh year.
“The Economic Recovery Act of 2020 was designed to help communities recover from the pandemic and set them on a path toward sustainable economic growth,” said Assemblywoman Eliana Pintor Marin, the Assembly budget chair. “The Aspire program offers incentives for redevelopment and investment in many areas of the state that have struggled to compete for the type of projects that will move these communities forward.”
