Gov. Phil Murphy, saying he was “calling for a new mindset” in how New Jersey does business, Wednesday discussed the tax incentive proposals he wants to bring to the state.
Murphy, speaking against the backdrop of the Jersey City skyline at Indiegrove, the first coworking space to open in the city, said he wants to replace the existing incentives, which were heavily criticized in a recent audit from the Office of the State Comptroller, with five new programs — all of which already had been previously introduced in some fashion.
Murphy reiterated that he wasn’t surprised by the results of the audit, but said he believes tax incentives can play a role in revamping the state’s business climate — if done right. Especially if the incentives target startups rather than existing corporations, he said.
“Tax incentives should be … part of a smart economic plan,” he said. “We want to recapture the magic.”
The governor, of course, needs the support of the Legislature to pass the appropriate legislation that would enact these new programs at the Economic Development Authority. Most of the old programs expire this summer.
Murphy said his team began crafting legislation in October after unveiling his economic vision and submitted the package to the Legislature before Christmas.
When asked if he should consider lifting the included caps on incentives, Murphy said, “No.”
“People need to feel like this is not an open-ended cash out the window,” he said.
Here are the five programs and a description of which existing tax credits they will replace. They include caps on the incentives that can be awarded, as well as a sunset date.
- NJ Forward: NJ Forward is a jobs-based incentives program to replace Grow New Jersey. Companies are eligible if they are creating new jobs in a high-growth industry, creating or retaining jobs in an Opportunity Zone-eligible tract, a U.S. business relocating or creating its Northeast headquarters, a foreign business creating a U.S. headquarters, or a major retention project. Bonus criteria emphasize local employment, above-average salaries and transit-oriented development. Awards under NJ Forward will be capped at $200 million annually, allocated on a first-come, first-served basis, and will last for five years.
- NJ Aspire: The replacement for the Economic and Redevelopment Growth Program, NJ Aspire is a gap-based financing tool awarded twice annually and capped at $100 million per year to support real estate goals in the new economy. Projects will be assessed on their cost, community benefit, advancement of regional planning and workforce and apprenticeship programs. Bonus criteria include food desert alleviation, electric vehicle charging stations and incubators/shared workspaces. Aspire will support the innovation economy and target urban centers and transit-rich downtowns.
- Brownfields Redevelopment: This credit is intended to catalyze remediation projects and increase job creation and economic development, Murphy said. EDA and the Department of Environmental Protection will run two competitive application rounds each year. The credit will be capped at $20 million per year and equal 40 percent of rehabilitation costs with a $4 million project cap.
- Historic Preservation: The new Historic Preservation Tax Credit will support place-based economic development with projects evaluated by EDA, DEP and the Department of Community Affairs. It is limited to revenue-generating projects and capped at $20 million annually with a $4 million project cap. The state will run two competitive applications each year for recipients with proven financing gaps, and projects will receive bonuses for including affordable housing or collaborative workspaces on-site.
- NJ Innovation Evergreen Fund: This fund is a $500 million effort that will raise funds over five years by auctioning off state tax credits and then leveraging partnerships with the state and private venture capital funds to co-invest in New Jersey startups. These investments will target the life sciences, financial technology, digital media and cybersecurity sectors, among others. The fund would also require ecosystem building and support diverse founders that reflect the state’s rich cultural makeup. As companies are acquired or IPOs occur, proceeds would flow back to the fund. In the event of significant returns, some funding would flow back to the General Fund.
These proposals also emphasize prevailing wage requirements and regular evaluations by independent parties.