Breaking down the incentive deal (we’ve got more details)

Gov. Phil Murphy, state Senate President Steve Sweeney and Assembly Speaker Craig Coughlin put nearly two years of fighting behind them and came to a tentative agreement on a new incentive program for the state Tuesday night.

The new incentives programs are included in a 127-page bill, which is scheduled to be discussed by the Legislature on Friday and voted on Monday. It is expected to pass.

Murphy sung its praises Wednesday morning, during a briefing to discuss the coming snowstorm. He said all parties worked to find common ground.

“Is every bill perfect? Of course not,” he said. “It’s got a lot that we should feel good about this. It’s got caps. The last program did not have caps. Forget how much they spent. They could have spent anything.

“It has strong compliance standards. It does a lot for communities that have been hit hard by COVID. It’s got historical tax preservation that we’ve never had in the state. It has, I can say unequivocally, the strongest labor protections and standards of any incentive package in the United States. It’s all really important stuff. None of it was in the prior set of incentives. Not most of it, none of it.”


Here’s a breakdown of some of the elements:

Caps: The overview

Summary: From the start, Murphy has said it was essential to have a cap for incentive programs. The old program was uncapped; there was no limit on what the state could invest in any given year. State officials said they feel there is a good balance of an appropriate safeguard and appropriate protection for taxpayers, but also said they have some flexibility and resources to make sure they can grow the economy.

Caps, part II: The incentive programs

Summary: There is $9 billion set aside for all the programs ($1.5 billion over each of the next six years). Of the $1.5 billion, $400 million is set aside for the “new” programs (Evergreen, Food Desert, Brownfields, Historic and Community Anchor Development programs). This leaves $1.1 billion for the successor to Grow New Jersey (called EMERGE) and the successor to Economic Redevelopment and Growth (called ASPIRE). But there is not a specific allocation between the two, giving the New Jersey Economic Development Authority the ability to give awards where officials feel it is most appropriate.

State officials feel the caps inside EMERGE and ASPIRE are more reasonable and more in line with the state’s competitors. There are lower per-job awards and lower total awards per company. The awards also are shorter in length, seven years instead of 10.

Caps, part III: Transformative Projects

Summary: There is $2.5 billion set aside as a separate cap for Transformative Projects. This will be part of the ASPIRE program. It will be an authorization of up to $250 million for 10 projects that are considered transformative — a term that still is being defined, but will be based on size (perhaps 500,000 square feet of space, or 1,000 units).

It’s important to note, if a project does not use all $250 million, the remainder of that money goes away — it does not roll into any of the other projects.

Infrastructure Fund

Summary: If EMERGE requires a capital investment and someone is moving into a building that does not need extensive renovation, the company/developer could make a contribution to the Infrastructure Fund instead.

This money would allow the state/municipality to do supportive infrastructure projects — which could be adding a bike lane or putting in electric vehicle chargers. There is no way to determine how much will be available in the fund, since it will be determined project by project.


Summary: The state is continuing the existing ERG program through September, to allow for time for projects in the pipeline to be acted upon.

Main Street: $50 million direct appropriation

Summary: The details of how the program will work are still being discussed, but there’s a belief that it will be used to do larger retooling projects and project-oriented supports. It could be loans, it could be grants, but count on there being technical assistance programs for things such as e-commerce.

It should not be viewed as another COVID grant program, where everyone who is eligible gets a check. It should be viewed as something that can be used strategically to rebuild. The EDA will have some degrees of freedom to program this.

And it’s an appropriation, one that EDA officials can only hope will become an annual number, giving them a standing small-business toolkit.

Towns: $5 million for planning

Summary: This is an attempt to give cities funding to write an economic development strategy so they can understand and influence how individual projects will impact what is around them — from traffic to schools to parks to sewars.

The hope is that it will enable cities to think about projects more comprehensively. The belief is, you can do a very good economic development plan in a big city for $500,000, so $5 million could go a long way.

Prevailing wage

Summary: There were a few loopholes around prevailing wage during the construction period that have been plugged. Previously, developers had the ability to assemble tax credits that didn’t trigger prevailing wage, because they were smaller percentages of a building. That has been fixed. There also is a requirement to pay prevailing wage for building service workers: custodial staff, security, food service, etc.

Community benefit agreement

Summary: There’s a threshold at which this is triggered, but, if you’re building a building, it requires an agreement between the developer/company with the municipality/state to make sure the project benefits the people who live nearby and who should be benefiting from these investments.

This could take different forms depending on the project, but could include local hiring or purchasing, committing to support a park or a school.


Tim Sullivan, the CEO of the EDA, said he was excited about the programs, but acknowledges it will be a while — much longer than Monday’s vote — before they can be implemented.

“It’s going to take some time to stand these programs up and stand them up the right way,” he said. “We have an uncompromising commitment to making sure we get these things done, not just impactfully for the economy, but with the right oversight and controls on them.”