Gov. Phil Murphy appeared last year at the Commercialization Center for Innovative Technology, a state-run incubator in North Brunswick, where he showcased his plans for a New Jersey Innovation Evergreen Fund. — Courtesy: Governor’s Office
By Joshua Burd
Gov. Phil Murphy has signed into law a bill that would create a seven-year, $14 billion package of tax incentives for key businesses and development projects in the state.
The legislation, a long-awaited step for commercial real estate and other industries in New Jersey, includes a host of tax credit programs that would help everything from early-stage companies to large corporate employers that are making location decisions. Importantly, for landlords and developers, the framework includes replacements for Grow New Jersey, a jobs-based incentive that helped spur major office deals, and the gap financing tool known as the Economic Redevelopment & Growth program, which both expired in June 2019.
It also includes caps on the subsidies and new forms of oversight, following controversy over the size and management of the incentives under Murphy’s predecessor, Gov. Chris Christie.
“Gone are the days of viewing incentives and economic growth as a zero sum game,” Murphy said during a press event Thursday morning. “It’s no longer about winners and losers. With this suite of incentives, the benefits of economic incentives will be able to radiate outward to transform whole communities and indeed our state for the better.”
Click here for a detailed look at the new programs.
Murphy signed the bill into law during a ceremony at Carella’s Chocolates and Gifts in Hamilton, seeking to highlight the bill’s focus on helping small businesses and other entrepreneurs, in addition to other stakeholders across business and development.
“This is how we propel our economy moving forward to be a strong and resilient post-COVID reality and future,” Murphy said. “There is so much throughout this package that is good for our state — strong protections for our union brothers and sisters, a commitment to eradicating food deserts, a vision for turning urban brownfields and long-ignored properties into accessible, walkable, affordable communities where good jobs are created and people can live, work and raise their families.
“We built this program on the twin pillars of transparency and fairness to fuel the creation of good-paying, future-focused jobs and ensured sensible spending caps and strong safeguards to protect taxpayers and communities.”
The New Jersey Economic Recovery Act of 2020 — which was passed overwhelmingly last month by the Senate and Assembly, despite concerns about being fast-tracked — follows a fierce debate over the breadth and the legacy of incentive programs that ballooned under the Christie administration. The controversy divided Democrats in Trenton, with Murphy ordering an audit of the programs that ultimately raised questions of mismanagement and alleged abuse by the Economic Development Authority.
Among other safeguards, most of the new tax credit programs are subject to a collective $11.5 billion cap over six years, while allowing for a seventh year of allocations under those programs for uncommitted credits. The law also provides for $2.6 billion in tax credits over 13 years for projects related to film and television production.
Additionally, the measure calls for creating an Office of Economic Development Inspector General with a chief compliance officer to manage a Division of Portfolio Management and Compliance. The bill appropriates $250,000 to implement these sections.
Longtime critics of the state’s incentive programs were also opposed to the new law, but business leaders lined up in support of the deal struck by Murphy and top lawmakers in mid-December. Developers were among those to hail the legislation.
“The economic development program announced (by Gov. Murphy) … provides the depth of programming and a six-year term that provides landlord and business owners with the opportunity to bring new employers to New Jersey with equitable, predictable and robust incentives,” John Saraceno, co-founder of Onyx Equities, said after the Dec. 15 announcement. “We have great appreciation for how complex and impassioned the negotiations were to get agreement from a broad set of stakeholders within and outside of government, and now we look forward to New Jersey being ideally situated to attract companies from across America to our great state.
“Coming out of COVID, New Jersey now has all the tools to take advantage of the suburban migration.”
Chris Paladino, president of the New Brunswick Development Corp., noted that the package “provides the state with tools to grow the New Jersey innovation economy,” a reference to a Murphy’s signature New Jersey Innovation Evergreen Program. The platform will allow the EDA to auction tax credits for cash and use the proceeds to invest in startups and other high-growth businesses.
“The most exciting aspect of the package is the ability to provide those engaged in the startup economy with resources to move from the lab bench, to prototype, to manufacturing,” Paladino said. “There are several aspects of the package that are key to fostering an ecosystem where high-growth industries can thrive.”