After a two-year halt, residential real estate developers in New Jersey can now apply for state tax incentives from $50 million set aside as part of legislation Gov. Phil Murphy signed earlier this year.
The New Jersey Economic Development Authority, based in Trenton, on Tuesday said it was looking for applicants for the residential component of the Economic Redevelopment and Growth, or ERG, program. That program, originally created to address project-financing gaps in development projects, had stopped accepting new applications in June 2019 because its enabling legislation ended.
The EDA and the state’s tax incentive programs at that time had come under criticism and were the subject of several probes, and the governor refused to extend the ERG legislation amid the controversy.
In March, the EDA officially announced it was reopening the ERG program as a result of the $50 million designated for it in the state’s Economic Recovery Act of 2020. That was a few months after Murphy signed the sweeping act, which set forth an overall $14.5 billion package of tax incentive programs.
Under the legislation, residential projects can receive tax credits of up to 30% of total eligible project costs. And projects in Atlantic City, Camden, Paterson, Passaic and Trenton can receive tax credits of up to 40% of eligible project costs.
Those ERG tax credits aren’t meant to be a substitute for conventional debt and equity financing, and applicants should have their primary debt financing in place before applying, according to the EDA.
“Thanks to the foresight of Gov. Murphy and the Legislature in reopening the ERG program, essential housing projects throughout New Jersey that have been on hold will be able to move forward while the new programs created by the Economic Recovery Act are under development,” Tim Sullivan, the EDA’s CEO, said in a statement.
“This will not only provide much-needed new housing in our state, but it will also drive economic growth by creating construction jobs and attracting more workers to New Jersey,” Sullivan said. “This is always important, but it is especially crucial now as we begin recovering from the economic impacts of COVID-19.”
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