New JerseyA4619220th Legislature (2024-2025)HouseWALLET

Modifies certain provisions of Historic Property Reinvestment and Brownfields Redevelopment Incentive programs.

Sponsored By: Eliana Pintor Marin (Democratic), M. Teresa Ruiz (Democratic), Shanique Speight (Democratic), Sumter, Shavonda E., Shirley K. Turner (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

16 provisions identified: 4 benefits, 5 costs, 7 mixed.

Redevelopment workers get prevailing wage protections

Covered historic rehabilitation workers must receive at least the prevailing wage during the selected rehabilitation period. Covered brownfield cleanup and construction workers receive prevailing wages through project completion. Building-services workers on both types of projects receive prevailing wages for 10 years after completion. If one or combined approved projects lease more than 35% of a facility, wage protections cover the whole facility. The brownfield agreement requirement applies to applications received after required rules are adopted.

Businesses can spread historic credit use

Businesses using a 24-month rehabilitation period claim historic credits when they make the final rehabilitation payment. Under a 60-month period, they claim credits when a distinct phase is complete. Unused credits can be transferred or carried forward for nine later tax periods, and apply after other tax credits. Claims require accountant-certified actual costs, completion records, and confirmation that submitted information is true. The New Jersey Economic Development Authority must certify costs, eligibility, and compliance with federal rehabilitation standards; businesses attach its certification to their returns.

Businesses get credits for historic exteriors

Qualifying businesses can get credits covering 50% of historic facade rehabilitation costs, up to $4 million per business. The Economic Development Authority can reserve up to 50% of yearly historic credits for these projects. Awards are competitive, based on preserving historic features, historic-district contributions, location, and community support. Facade projects do not need a financing-gap review.

More contaminated properties qualify for credits

More vacant or underused New Jersey properties qualify as brownfields, including sites with suspected contamination or contaminated building materials. Eligible cleanup includes hazardous-material disposal, demolition, asbestos and PCB removal, landfill improvements or capping, and contaminated wood or paint removal. Work must address a known, suspected, or threatened contaminant discharge. Payments for damage to natural resources do not count as cleanup.

Cleanup developers cannot save unused credits

For applications received after required rules are adopted, brownfield credits apply only in the tax period when awarded. Unused credits cannot carry forward. Combined with other credits, they cannot reduce New Jersey corporation business tax below the statutory minimum.

Cleanup developers face checks and penalties

Brownfield applicants need good standing with State labor, environmental, and treasury departments, or corrective-action agreements, before approval and signing an agreement. Developers must certify contractors' public-works registration, non-debarment, and New Jersey tax clearance. A material false statement in an application causes forfeiture of all awarded program credits. For applications received after required rules are adopted, agreements allow repayment of credits for good-standing failures without corrective agreements or missing contractor confirmations. Rules must also allow possible forfeiture of all credits awarded in a year of departmental compliance failure.

Cleanup developers face environmental eligibility rules

For applications received after required rules are adopted, developers must prove they did not cause contamination or inherit cleanup liability. Projects must follow applicable cleanup laws, hazard-removal rules, and required environmental oversight agreements. Before signing redevelopment agreements, projects must meet authority green-building standards covering renewable energy, energy efficiency, and non-renewable resources. Projects must also meet the authority's affirmative-action requirements. To receive credits, developers must transfer their rights to recover cleanup costs from responsible parties to the State environmental department.

Cleanup developers pay review and reporting costs

Developers pay the full direct cost of outside application reviews that State economic-development or environmental agencies find necessary. For applications received after required rules are adopted, qualified professionals must certify actual cleanup costs and completion. Projects governed by the Site Remediation Reform Act also need a Response Action Outcome documenting cleanup completion. Developers must swear their information is true, supply applicable occupancy information, and file progress reports every six months plus annual reports. The authority reviews annual reports for departmental standing, corrective-action arrangements, and contractor compliance.

Historic developers risk losing tax credits

Historic credit recipients must file annual reports and maintain good standing with State labor, environmental, and treasury departments. Without good standing or a practical corrective-action agreement, recipients forfeit all credits awarded for that year. Businesses must certify contractors' required public-works registration, non-debarment, and New Jersey tax clearance. Property changes that break program or agreement requirements trigger credit repayment within five full years after rehabilitation ends. Ineligible plan changes also trigger repayment for phased 60-month projects, and disallowed unused credits become void.

State-backed retailers face labor agreement rules

Certain brownfield retail and distribution projects must enter labor harmony agreements when the State has an ownership or business interest. The requirement covers retail establishments with more than 10 employees and distribution centers with more than 20 employees. Agreements provide labor-relations protections and last while the State acts as a market participant. The authority can waive the requirement only through a written finding that it makes the project infeasible. This applies to applications received after required rules are adopted.

Cleanup developers compete for limited credits

Brownfield applications receive rolling review unless the authority expects demand to exceed available credits. When demand is too high, applications compete as though submitted on the same date. Every award requires a minimum score set by the authority. Scoring can favor community benefits, financial feasibility, reduced environmental or health burdens in overburdened communities, and board diversity and community representation.

Cleanup developers gain application timing flexibility

Outside government-restricted municipalities, brownfield projects must show a financing gap when cleanup costs reach $5 million. All applicants must show the project is not economically feasible without the credit. Cleanup generally cannot start before applying, except for preliminary investigations and specified health-and-safety work. Developers can apply after starting when contamination's full extent was not reasonably knowable, with a sworn statement that credits are needed to finish cleanup and begin redevelopment. For applications received after required rules are adopted, developers can request later cleanup deadlines, subject to credits being available in the revised completion year.

Cleanup developers get tiered tax credits

For applications received after required rules are adopted, brownfield credits depend on location, project type, and certified cleanup completion. Projects in qualified incentive tracts or government-restricted municipalities get up to 80% of cleanup costs, capped at $12 million. Solar arrays on closed sanitary landfills get up to 100% of cleanup and capping costs, capped at $12 million in those locations or $8 million elsewhere. Other projects get up to 60%, capped at $8 million; each award uses the lower of actual and projected eligible costs. Qualified incentive tracts have poverty rates of at least 20% or median family income no more than 80% of the statewide or metro median.

Developers face minimum project funding shares

Financing-gap calculations require developer capital equal to at least 20% of historic rehabilitation or brownfield cleanup costs. The minimum falls to 10% for redevelopment projects in government-restricted municipalities. Brownfield calculations count specified deferred developer fees, federal or local grants, and federal or local tax-credit sale proceeds as equity. State grants, State credits, and redevelopment-area bond proceeds do not count toward brownfield equity. For new brownfield projects, the financing gap uses full project costs, but awards use cleanup costs.

Historic developers face yearly award limits

Unused yearly authorization and unapproved, uncertified, or recaptured historic credits can carry forward for later allocation. Transformative-project approvals can exceed the usual yearly limit by up to 50%, reducing the following year's limit by that excess. When approved requests exceed available credits, the authority weighs historic importance, neighborhood benefits, economic sustainability, geographic balance, and statewide growth policies. A single award over $2 million can be spread across multiple fiscal years.

Historic property tax breaks have limits

Qualifying businesses get historic rehabilitation credits: 60% of costs, capped at $12 million, in qualified incentive tracts or government-restricted municipalities. Transformative projects get 45%, capped at $50 million; other qualified properties get 50%, capped at $8 million. Eligible property must produce income through commercial use or residential rental use with at least four homes. Rehabilitation costs must reach the greater of $5,000 or the structure's adjusted federal tax basis. Projects must need the credit to be economically feasible, and businesses must sign a rehabilitation agreement before work starts. Projects costing at least $5 million outside government-restricted municipalities must also show a financing gap.

Sponsors & Cosponsors

Cosponsors

Britnee N. Timberlake
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 116 • No: 1

House vote • 6/28/2024

3RDG FINAL PASSAGE

Yes: 76 • No: 1

Senate vote • 6/28/2024