As last reported in the December, 2013 issue of In The Zone, legislators attempted to guide through the legislative process Bill Nos. A4501 and S3030 which were coined the "New Jersey Economic Opportunity Act II of 2013." Act II was intended to build on the New Jersey Economic Opportunity Act of 2013 (NJEOA) signed into law last September. Full legislative support could not be generated during the Legislature's lame-duck session and that effort died with the expiration of the legislative term. In the new legislative term, the past efforts have been renewed in bills known as Economic Opportunity Act of 2014, Part I and Economic Opportunity Act of 2014, Part III (S928 and S1551, respectively). For the most part, these bills represent legislative tweaking of the NJEOA, and thus have modest but important goals.
As of this writing, the Economic Opportunity Act of 2014, Part II, has not been dropped, but it is anticipated to be introduced at some point in the not too distant future.
Part I seeks to plug some existing gaps in the existing law. Under the Urban Transit Hub Tax Credit Act, certain municipalities could choose whether there should be affordable housing set asides. Under NJEOA, that exception was not continued. Section 1 of S928 plugs the gap and authorizes the exception to the 20 percent affordable housing set aside requirement under the ERGG Program. Sections 2 and 3 of the Bill further amend the ERGG Program to authorize an additional $250,000,000 of tax credits. It is the intention of the legislation that these credits will be used exclusively for the redevelopment or rehabilitation of support, special needs, very low income, low income or moderate income housing. However, 100 percent of the housing units must be reserved for affordable housing. Further, $50,000,000 of the credits are to be used for projects that will have 25-100 housing units. Finally, the New Jersey Housing and Mortgage Finance Agency is directed to manage the program in consultation with the New Jersey Economic Development Authority. There is also a technical correction extending the deadline to July 28, 2018 from 2015 and displaced residents in certain areas impacted and distressed by Hurricane Sandy, are given a limited right of first refusal to qualified residential housing.
Part III makes an effort to make the market for tax credit transfer certificates more liquid. It proposes to reduce the minimum amount of the certificates that can be transferred from $100,000 to $25,000. The Bill also proposes several changes to the "Grow New Jersey Assistance Act" ostensibly to better reflect the marketplace. It:
- Alters the meaning of full time employment in a supermarket or similar retail industry to conform to custom or practice in the industry;
- Includes a construction project as a qualified business facility as defined by the NJEOA;
- Modifies the "net positive benefit test" to require a business to demonstrate that the capital investment will benefit the State and the host municipality;
- Proposes changes to encourage non-profit corporations to undertake projects by permitting a non-profit to apply for a "unified project" in which several businesses that would not otherwise qualify can participate;
- Proposes to allocate tax credits to shareholders of New Jersey S corporations, and their "qualified sub-chapter S subsidiaries", if the project is in a "Garden State Zone;"
- Mitigates the law's harshness where businesses that must shed jobs by allowing a pro rata reduction of credits rather than forfeiture;
- Permits supplementary tax credits if the business exceeds the targets for creating and retaining jobs; and
- Makes, finally, a number of technical changes, one of which is to extend the deadline for the qualified residential project developer's receipt of a temporary certificate of occupancy to July 28, 2018 from 2015.
One of the primary sponsors of this legislation is Raymond Lesniak. As of this writing, it remains an open question whether he can garner support for passage of these amendments to the NJEOA.
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