Gov. Phil Murphy speaks during a recent event in Newark. — Courtesy: Governor’s Office
By Joshua Burd
Gov. Phil Murphy has signed into law a bill that extends key deadlines for some projects that are still in development but were approved under two of the state’s defunct incentive programs.
The legislation, S3046, gives developers until the end of 2023 to submit temporary certificates of occupancy for certain residential and mixed-use parking projects that were vetted under the Economic Redevelopment & Growth program. The bill also extends deadlines for businesses to submit tax documents related to the Urban Transit Hub Tax Credit program, which operated from 2008 through 2013, and to certify that they’ve met the law’s requirements for capital investment and employment before having to forfeit their annual subsidies.
All three deadlines were extended by more than two years, in part to help preserve projects that have been delayed by the COVID-19 pandemic and those that would support hard-hit communities. The law also makes an additional $20 million in tax credits available under the Economic Redevelopment & Growth program, or ERG, which expired in June 2019.
The measure does not directly identify which applicants would be impacted by the extensions, although the state Economic Development Authority lists certain projects in Paterson, Newark and other areas that are still pending completion or certification. The bill’s sponsors include lawmakers from Passaic and Essex counties.
Murphy enacted the law on Wednesday as lawmakers, business leaders and others await his signature on a landmark bill to create new tax incentive programs. Passed by Legislature on Monday, the measure would establish a seven-year, $14 billion package of subsidies that would support everything from urban renewal and tech startups to attracting large corporate employers.
The governor is expected to sign the bill, which follows a two-year battle in Trenton, after recently announcing an agreement on the framework with top Democratic lawmakers. Leaders of commercial real estate and other industries have urged him to do so after having grappled with the lapse of New Jersey’s previous incentive programs 18 months ago, ongoing competition from other states and economic fallout of the pandemic.
The law enacted Wednesday comes a month after a conditional veto by Murphy. The Democratic governor had expressed support for the proposal but asked lawmakers make the additional $20 million in tax credits available under ERG, a powerful gap financing program for developers.
At the time, Murphy noted that new incentive programs were also on the way.
“While my partners in the Legislature and I continue to work on legislation to facilitate the next generation of economic development projects, this bill will extend certain deadlines under the existing programs in order to advance shovel-ready projects in communities that have been among the hardest hit by the (COVID-19) pandemic,” he wrote in the Nov. 16 conditional veto message. “I commend the bill’s sponsors for recognizing the need to give projects that have already submitted applications to the UTHTC and (ERG) programs additional time to submit the documentation and obtain the certificates of occupancy necessary to receive the tax credits.
“The projects implicated in the bill, which were approved under the prior tax incentive programs, will be particularly critical to our state’s economic recovery.”
He added that “while this legislation provides a lifeline to businesses and developers in need of additional time to satisfy project deadlines, it fails to assist others that may not have the financing necessary to bring their projects to completion.” To that end, he recommended the additional capacity under the ERG program.
“The additional credits will allow the New Jersey Economic Development Authority to act on new or existing applications under the (ERG) program to help combat the pandemic’s negative impacts on project development in the real estate market,” Murphy wrote to lawmakers. “The COVID-19 crisis has presented an unusual hardship for real estate developers who have struggled with a lack of project financing and liquidity in the capital markets caused by the financial uncertainty brought about by the pandemic. The changes I am recommending today will spur immediate economic activity, leverage private capital investments, and create jobs for state residents at this critical time.”