The New Jersey Economic Development Authority (NJEDA) began accepting applications today for the Aspire program, a place-based economic development program created under the New Jersey Economic Recovery Act of 2020 (ERA). The Aspire program supports mixed-use, transit-oriented development by providing tax credits to commercial and residential real estate development projects that have financing gaps.
The Aspire program application, as well as complete rules, eligibility requirements, award sizes, and other information, are available at https://www.njeda.com/aspire.
“The Aspire program will help to advance new housing and commercial development projects throughout the state, with a focus on communities that have long been overlooked,” said Governor Phil Murphy. “New Jersey’s economy is rebounding, and housing is in high-demand. Our Administration has long prioritized transit-oriented development, affordable housing, and other projects of public interest, and we will continue to do so under the Aspire program.”
“Gov. Murphy’s economic development strategy is focused on attracting investment to underserved communities and revitalizing our urban centers and places served by transit,” said NJEDA Chief Executive Officer Tim Sullivan. “With the new Aspire program, we look forward to helping to catalyze a series of mixed-use, transit-oriented, mixed-income and affordable housing projects that advance important administration economic and social goals.”
“The Aspire program applicants with affordable housing components will also be eligible for Low-Income Housing Tax Credits, which are issued by the New Jersey Housing and Mortgage Finance Agency (NJHMFA). These two programs can be leveraged to advance the state’s priorities through the development of transformative mixed-income, mixed-use projects,” said NJHMFA Executive Director Melanie R. Walter.
The Aspire program is part of the suite of resources created under the ERA to address the ongoing economic impacts of the COVID-19 pandemic and build a stronger, fairer New Jersey economy. It encourages mixed- use, transit-oriented development in New Jersey by providing tax credits to commercial and residential development projects that have a financing gap. 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 meet certain parameters can qualify as “transformative projects,” which may receive tax credits up to $350 million.
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.
The NJEDA’s Aspire Mapping Assistant is available to help potential applicants determine if proposed projects may be eligible to participate in the Aspire Program, including whether they may qualify as “Transformative Projects.”
“Aspire will help generate greater investment in our communities by providing enhanced incentives for projects in distressed municipalities, including the creation of affordable housing and returning long-dormant sites to productive use,” said Senator M. Teresa Ruiz, the prime sponsor of the ERA. “Aspire exemplifies the ERA’s core principles of responsible investment, greater oversight and tangible community benefits.”
“The Economic Recovery Act of 2020 was designed to help communities recover from the pandemic and set them on a path toward sustainable economic growth,” said Assembly Budget Chair Assemblywoman Eliana Pintor Marin. “The Aspire program offers incentives for redevelopment and investment in many areas of the state that have struggled to compete for the type of projects that will move these communities forward.”
To be eligible for Aspire program tax credits, a project 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.
Projects must also 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.
In addition to meeting these baseline eligibility requirements, the developer of a project seeking Aspire program tax credits must be in substantial good standing with the New Jersey Department of Labor and Workforce Development (DOL), the New Jersey Department of Environmental Protection (DEP), and the Department of the Treasury. Projects must also comply with environmental laws (including flood hazard requirements), meet green building requirements, and pay prevailing wages to construction workers and building service workers.
In line with Governor Murphy and the NJEDA’s commitment to fiscal responsibility and transparency, the Aspire program rules include provisions, such as a gap financing review, excess revenue sharing requirements, and a net positive economic benefit test for most projects, to ensure tax credits are awarded responsibly.
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.
The Aspire program rules also include requirements to ensure that communities where projects are located participate in and benefit from the economic growth the project generates. As part of the application for projects, applicants must provide a letter of support from the governing body of the municipality or municipalities in which the project is located and projects with an eligible project cost equaling or exceeding $10 million must also enter into a Community Benefits Agreement with the Authority and municipality or county in which the project is located.
Furthermore, projects including newly constructed residential units must set aside at least 20 percent for occupancy by low- and moderate-income households. The NJEDA will build on the coordination and collaboration practices with the New Jersey Housing and Mortgage Finance Agency (NJHMFA) that were established under the ERG program to ensure that Aspire projects with affordable housing components comply with housing rules and meet the housing needs of New Jersey’s growing work force.
In addition to the Aspire 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 New Jersey; and support for the growing film and digital media industry. More information about these programs is available at https://njeda.com/economicrecoveryact.
Article Courtesy of the NJEDA