SOURCE: NJCPA.com
Applications are now open for the Emerge program, a new jobs-based tax credit program created under the New Jersey Economic Recovery Act (ERA) of 2020 and administered by the New Jersey Economic Development Authority (NJEDA). The Emerge program will drive economic development in New Jersey by making tax credits available to projects that invest private capital into the state and create good-paying jobs, with a focus on the State’s priority sectors.
The Emerge program application, as well as complete rules, eligibility requirements, award sizes, and other information, are available at njeda.com/emerge.
The Emerge program is part of the suite of programs created under the ERA to address the ongoing economic impacts of the COVID-19 pandemic and build a stronger, fairer New Jersey economy. Through the Emerge program, small and large businesses, as well as nonprofits, can apply for tax credits to support projects that meet minimum capital investment, job creation or retention, and other requirements. Projects can qualify to receive tax credits over a seven-year eligibility period, starting after the NJEDA confirms the applicant has completed its investment, employment, and other eligibility requirements.
Base tax credits will range from $500 to $4,000 per job, per year, depending on location and other aspects of the project. Bonuses are also available based on certain criteria such as project location, industry, and alignment with other policy objectives. These bonuses can increase annual per-job credits to a maximum of $8,000 per job. Projects with significant numbers of retained jobs (at least 500 or 1,000 jobs depending on the project’s location) can receive tax credits for retained jobs; however, the ERA sets the amount of tax credits for each retained job at half the amount that would be awarded for equivalent new jobs. Jobs that are covered by a labor harmony agreement are eligible for an additional $1,000 bonus over the capped amounts.
To be eligible for tax credits under the Emerge program, projects must create or retain a minimum number of jobs. The job creation requirement is lower if a business is primarily engaged in a targeted industry or if a business is a “small business” as defined in the program rules. Additionally, at least 80 percent of incented employees’ work time must be spent in New Jersey, and the business must commit to stay in the qualified business facility for at least 1.5 times the duration of the eligibility period. A minimum capital investment in the qualified business facility is required based on the use. Businesses may make an equivalent donation to a Recovery Infrastructure Fund in place of investing in their project facilities. Small businesses are not required to make capital investments.
All projects that receive tax credits under the Emerge program must meet minimum environmental standards, meet prevailing wage obligations for all construction workers and building service workers, and provide health care for employees. Projects that have a total cost of $10 million or more are also required to enter into a Community Benefits Agreement with the NJEDA and the municipality or county in which the project is located. These agreements will create a Community Advisory Committee to monitor compliance with the respective agreement.
To ensure a strong return on investment for New Jersey taxpayers, projects that receive tax credits under the Emerge program must yield a minimum net positive economic benefit to the state of 200 to 400 percent depending on project location and the nature of the project. Applicants must also demonstrate that they are considering a viable out-of-state location, and awards will be limited to the amount the NJEDA determines is necessary to induce the project to locate or remain in New Jersey. The NJEDA will also review detailed financial information about the project to verify the award of tax credits is a “material factor” in the business’s decision to create or retain jobs in New Jersey.
The Emerge program is capped with the Aspire program – a separate ERA program designed to catalyze community redevelopment – at $1.1 billion per year over six years. To ensure the benefits of the program are distributed equitably throughout the state, the Emerge and Aspire program cap is split between northern and southern counties for the first three years of the respective programs. Any unused tax credits for a particular year may be carried forward to the subsequent year subject to geographical and amount limitations in place at that time.
In addition to the Emerge program, the ERA creates a suite of programs that includes tax credits to incentivize job creation, new construction, and revitalization of brownfields and historic properties; financial resources for small businesses; support for new supermarkets and healthy food retailers in food desert communities; new funding opportunities for early-stage companies in Ne Jersey; and support for the growing film and digital media industry. More information about these programs is available at njeda.com/economicrecoveryact.
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