Gov. Phil Murphy announces his sweeping economic agenda on Monday, Oct. 1, at Prism Capital Partners’ ON3 campus in Nutley. — Photo by Edwin J. Torres/Governor’s Office.
By Joshua Burd
Amid his sweeping plan to spur a new wave of innovation in the state’s economy, Gov. Phil Murphy has offered a glimpse at what could come of the incentive programs that have helped bolster New Jersey’s commercial real estate market in recent years.
The first-year governor on Monday unveiled plans for “a more targeted and strategic tax incentive system” known as NJ Forward, which would presumably replace the Grow New Jersey program. The new system would “take the best aspects of our current incentives and retool them to fit within both our current fiscal constraints and future economic aspirations,” he said, noting that he looks forward to working with the Legislature on the initiative.
“We will prioritize job creation over job retention, and encourage companies to look to our urban communities where mass transit can bring employees and employers together,” Murphy said during a high-profile address at the ON3 campus in Nutley. “We will use a program cap to bring rewards back in-line with our peer states, and to focus bonuses to align with our vision. And, we will reward companies who invest in their employees through skills development and training.”
“We will have a program as good as the companies it helps to succeed.”
While Murphy detailed a host of major initiatives — headlined by a proposal to draw $500 million in venture capital funding to New Jersey — his plans for the state’s incentives programs have been the source of great anticipation within commercial real estate circles. Grow New Jersey sunsets at the end of next June, which has led to uneasiness and uncertainty among developers, brokers and others who see it as a difference-maker in their transactions.
That uneasiness dates back to Murphy’s gubernatorial campaign last year, in which he often blasted the volume of tax credits awarded under Gov. Chris Christie and argued that they unfairly benefit large corporations.
But in his remarks and in a report released Monday, Murphy said NJ Forward “preserves the best features of the existing program while also making important reforms that recognize the state’s constrained fiscal resources and improved economic conditions since the depths of the Great Recession.” The report highlighted several key goals of that effort, including:
- Focus primarily on high-wage, high-growth sectors such as life sciences, information and high tech, clean energy, advanced manufacturing and others
- Increase the focus on global and U.S. headquarters projects, R&D activities and foreign direct investments
- Prioritize new job creation rather than retained jobs
- Encourage job creation in urban centers and other distressed communities, particularly those with public transit assets
- Include an annual award cap and review to ensure fiscal sustainability and transparency
- Feature lower base per-job credit amounts more in line with peers, as well as more focused bonuses that ensure the administration’s policy goals
- Limit transfer of credits to ensure that job-creating companies reap the primary benefits of the taxpayers’ investment
- Reward companies that invest in employee skill development and training
Murphy also detailed another tax credit program that is sure to resonate with developers and investors: a place-based gap financing tool to help spur investments in commercial, residential, and mixed-use projects, including parking. The program, known as NJ Aspire, would have a particular focus on cities, downtowns and suburban neighborhoods served by mass transit.
Notably, the program would be structured as a competitive tax credit grant, which will enable the state Economic Development Authority to compare projects and identify the most impactful and development-ready plans, the report said, ensuring a strong return on investment for taxpayers. The program will also feature a program cap and a per-project cap, while also generating funds to support public infrastructure investments.
The proposal seems poised to build on the success of the state’s Economic Redevelopment and Growth program and improve it in areas that advocates say needed further attention.
“Our vision for revitalizing communities recognizes that attracting private-sector jobs and investment to distressed communities often requires gap financing in addition to private debt and equity financing,” the report said. “This is particularly true when a project advances important public policy ambitions — such as transit-oriented development, affordable and workforce housing, creation of incubator and collaborative workspaces and infill development on smaller development parcels.”
