The board of the New Jersey Economic Development Authority on Wednesday approved rules for the Aspire program, a place-based economic development program created under the New Jersey Economic Recovery Act of 2020.
As authorized by the ERA, the board approved rules that will be effective immediately for a short-term duration, enabling the NJEDA to move forward with instituting the program this year. Concurrently, the board also approved publishing the rules for public comment prior to adopting longer-term rules.
The Aspire program is intended to support mixed-use, transit-oriented development by providing tax credits to commercial and residential real estate development projects that have financing gaps.
The amount of tax credits a project is eligible to receive is a percentage of the project’s eligible costs, subject to a cap that is determined by the project’s location, other financing available and other aspects of the project. Most projects are eligible for tax credits up to $42 million, but projects that meet specific criteria may receive tax credits up to $60 million. Projects that qualify as “transformative projects” may receive tax credits up to $350 million.
Collectively, projects under the Aspire program and the Emerge program — a separate ERA tax incentive program focused on attracting high-quality jobs to New Jersey — are subject to a program cap of $1.1 billion per year in tax credit awards for each of the first six years of the programs, with the cap split between northern and southern counties. Unused amounts may be carried forward each year, and any remaining unused tax credits are available in the seventh year.
To be eligible for Aspire program tax credits, a project must meet the following guidelines:
- Location: It must be located in an eligible incentive location, which may include: Planning Area 1, Aviation District, Port District or Planning Area 2 or other Designated Center that is within a half-mile of a rail transit station or a high-frequency bus stop. Film production projects may be located anywhere in the state.
- Size and costs: Projects must meet minimum size and cost thresholds. Commercial projects must include at least 100,000 square feet of retail or commercial space. Residential projects must have eligible project costs totaling $5 million to $17.5 million, depending on location.
- Environment: Projects must comply with environmental laws (including flood hazard requirements), meet green building requirements and pay prevailing wages to construction workers and building service workers. (Retail, warehouse, and/or hospitality establishments with a certain number of employees that are included in projects with a state proprietary interest and that receive tax credits must enter into a labor harmony agreement with a labor organization or cooperating labor organizations that represent relevant employees in the state.)
- Good standing: The developer of a project seeking Aspire program tax credits must be in substantial good standing with the Department of Labor & Workforce Development, the Department of Environmental Protection and the Department of the Treasury.
Projects that meet certain parameters can qualify as “transformative projects” and receive tax credits above and beyond the caps that are established for standard projects.
Transformative projects must have eligible costs of at least $100 million and be at least 500,000 square feet, or up to 250,000 square feet for film studio projects. Transformative projects must also demonstrate special economic importance to New Jersey and leverage New Jersey’s mass transit assets, higher education assets and other economic development assets to attract or retain employers and skilled workers.
“Supporting equitable development and growth that aligns with communities’ priorities is central to Gov. (Phil) Murphy’s economic plan,” EDA CEO Tim Sullivan said.
“The Aspire program rules approved today establish the framework for a robust policy that will support much-needed mixed use, transit-oriented development in communities all around New Jersey. Importantly, these rules also build in much-needed safeguards to ensure transparency, accountability and fiscal responsibility. This is an important step forward for New Jersey that will drive sustainable, inclusive growth.”
