N.J. Stat. § 34:1B-312
The purpose of the New Jersey Community-Anchored Development Act is for the New Jersey Economic Development Authority to facilitate, in partnership with the State's key not-for-profit and governmental anchor institutions, large-scale development projects with desirable employment and geographical characteristics that are to impact a broader community. The Legislature finds that where a broad commonality of goals exists between anchor institutions and the State, the authority can effectively utilize anchor institutions as investors in, and additional overseers of, projects that the authority seeks to incentivize. Under the legislation, anchor institutions in the areas of education, health care, culture, community development, and economic development are provided with the opportunity to act as investors in targeted development, utilizing proceeds from the sale of State tax credits. This approach harnesses the deep experience of the numerous anchor institutions in the State, institutions that enjoy decades-long relationships with communities around the State, making them ideal partners for companies wanting to come to or expand in New Jersey.
This legislation seeks to overcome cost-of-occupancy differences between New Jersey and less expensive options in other jurisdictions for specific properties by reducing the cost of occupancy being offered to a targeted company. This legislation represents a shift in State economic development policy from a grant model to an investment model, differing significantly from past award models in that the legislation does not provide a certain dollar amount to private employers based on the number and types of jobs being created or preserved in the State.
The legislation affords an opportunity for an anchor institution and the authority to become partners in a project, with the authority receiving a negotiated current or deferred economic return on the tax credit investment made by the anchor institution and ultimately the return of the amount initially invested. Through a competitive application process to the authority, a real estate partnership between an anchor institution and a partner business will make its case for an amount of tax credits necessary for that project to be able to establish occupancy costs at a competitive level.
By its inclusion of designated federal opportunity zones and areas eligible to be designated as federal opportunity zones as a separate basis for projects to receive tax credits, the legislation seeks to incentivize anchor institutions to look beyond the borders of their host communities, permitting them to invest in other locales that lack strong anchor institutions, thus expanding their influence and impact by doing so. Simultaneously, such investments will further the objectives of the State in attracting high-value employers and in providing economic stimulus to areas of the State that prior investment cycles have overlooked. The legislation is also expansive enough to permit the addition of other beneficial uses to a qualifying project; including housing, public amenities, parking, mixed uses, and facilities of an anchor institution itself.
The tax credits issued by the authority to an applicant anchor institution are to be issued pursuant to a tax credit agreement that sets forth negotiated terms on which the authority has agreed to issue the credits. The tax credit agreement is to include standards relating to the anticipated economic results of the community-anchored project and address accountability in the event that the community-anchored project fails to meet the requirements specified in the tax credit agreement.
The Legislature declares that two principal objectives underscore the policy approach of this legislation: first, an incentive program cannot succeed as a one-size-fits-all structure, and therefore an award of tax credits is to be thoroughly underwritten by the authority and specifically designed for scenarios in which the authority finds that the award will be effective; and second, the State is better served where the State's financial support is characterized and treated as an investment rather than an explicit grant.
N.J.S. § 34:1B-312