The New Jersey Economic Development Authority is now accepting applications for commercial projects under the Economic Redevelopment & Growth program, which is better known as ERG.
If you were thinking that ERG was phased out, you are correct. But, it was reinstated by the EDA as a source for revenue for such projects while the rules for Aspire, ERG’s successor, were being developed.
Earlier this summer, as part of the cleanup process of the New Jersey Economic Recovery Act of 2020, the state announced it would provide $75 million for commercial ERG projects.
All applicants are required to submit an application through the EDA’s online application portal (here). Applications will be accepted on a first-come, first-served basis until funds are exhausted or Dec. 30 of this year.
The Commercial ERG Program is an incentive to help developers and businesses address project financing gaps in development or redevelopment projects, including below-market development margins or rates of return.
Qualified projects can receive an incentive grant reimbursement of up to 30% of total eligible project costs. Projects in Atlantic City, Camden, Paterson, Passaic and Trenton can receive reimbursements up to 40% of eligible project costs.
Subsidies awarded through the ERG program are not meant to be a substitute for conventional debt and equity financing. Before applying, applicants must have the balance of their funding identified or in place or be able to demonstrate that any terms of other financing are reasonable.
EDA officials said the new phase of the Commercial ERG Program is subject to the existing ERG regulations and statutes, as amended by the New Jersey Economic Recovery Act of 2020, including but not limited to:
- Be predominantly commercial and contain 100,000 or more square feet of retail, office and/or industrial uses for purchase or lease;
- Be located in a qualifying incentive area;
- Not have commenced any construction at the site of a proposed redevelopment project prior to submitting an application or demonstrate to the NJEDA that the project would not be completed otherwise or is to be undertaken in phases;
- Demonstrate that a project financing gap exists;
- Demonstrate the tax revenues the state will realize from the project will be greater than the incentive being provided.
For comprehensive information on eligibility for the extended Commercial ERG Program, click here.
