New JerseyS1323220th Legislature (2024-2025)SenateWALLET

Revises various provisions concerning New Jersey Aspire Program and surrender of tax credits issued under New Jersey Economic Recovery Act of 2020.*

Sponsored By: Ellen J. Park (Democratic), Eliana Pintor Marin (Democratic), Pou, Nellie, Paul A. Sarlo (Democratic), Benjie E. Wimberly (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

15 provisions identified: 4 benefits, 5 costs, 6 mixed.

Affordable homes reserved for lower-income renters

Qualifying Aspire housing projects must reserve at least 20% of newly built units for low- and moderate-income households. Affordability rules cover bedroom sizes, average affordability, marketing, and long-term deed restrictions. These protections must meet Fair Housing Act standards in effect just before P.L.2023, c.98 took effect. Projects receiving federal historic rehabilitation or New Jersey Historic Property Reinvestment tax credits are exempt only from bedroom-distribution controls.

Developer tax credits face tiered caps

Aspire credits cannot exceed the project's financing gap and face percentage and dollar caps. Projects in municipalities qualifying as government-restricted before P.L.2025, c.2, and special-mission nonprofit projects have an 85% cost cap. Newly qualifying government-restricted municipalities have an 80% cap; both government-restricted tiers and special-mission nonprofits have a $120 million project or phase cap. A 60% cap and $90 million limit apply to residential projects with federal 4% housing credits and projects in qualified incentive tracts, enhanced areas, or municipalities with distress scores of at least 50. Other projects face a 50% cap and $60 million limit; transformative projects also face a $400 million total cap across phases.

Developers must share excess project returns

The authority checks project returns at certification and after eligibility year seven, with timing adjustments possible for periods under 10 years. Returns exceeding the approved reasonable return by more than 15% trigger a required payment of up to 20% of the excess. The trigger falls to more than 10% in a year when the State buys the project's credit certificate. Escrow payments are funded in equal annual installments over the first seven years, with final settlement after the eligibility period. Excess funds go to the State General Fund; escrow is released if final returns do not exceed the approved benchmark.

Fewer hurdles for nonprofit supportive housing

Qualifying special-mission nonprofit projects skip Aspire's net benefit test, affordable housing requirements, and application market study. They must be in a government-restricted municipality or enhanced area and serve a mission approved by the development authority. Projects can include up to 100 housing units, all supportive housing for tenants needing special-needs or social services. They can also include up to 25,000 square feet of on-site social-service space. Those programs must require a state child care center license.

Developers gain protection against award reductions

Aspire agreements can require checks of financing gaps and projected cash flow. The development authority can use verified figures to calculate the required return on investment. It cannot use executed financing commitments or updated projected cash flow to resize or reduce the credit. An agreement also cannot place the project in default solely because the developer, an affiliate, or a business with shared principals defaults under another authority assistance program.

More locations and warehouses qualify

Aspire's aviation district now includes Trenton-Mercer Airport and land within one mile of its outer boundary. Warehouse distribution and fulfillment projects qualify as commercial projects when eligible costs include at least $10 million in environmental cleanup. More municipalities qualify as government-restricted through three sets of population, county-seat, highway-location, and distress-score criteria. Each category requires its full set of criteria, including an applicable distress score of 62.1, 100, or 55.5. Each government-restricted municipality also gets an authority staff liaison for project updates and economic-development coordination; eligibility does not guarantee an award.

Developers and contractors face compliance checks

Aspire applicants need state tax clearance; applicants more than 24 months behind on taxes cannot qualify. Before board review, the authority checks standing with the labor, environmental protection, and treasury departments and can obtain background checks. Developers must confirm contractor and subcontractor public-works registration, tax clearance, and compliance with applicable state and federal construction-debarment rules. Developers lose the award for any year they lack both substantial good standing with the specified departments and a practical corrective-action agreement. They must also arrange on-site consultations with the state workplace-safety division.

Developers face minimum investment requirements

Commercial Aspire developers must contribute at least 20% of total project cost, or 10% in government-restricted municipalities. Residential projects and commercial projects consisting solely of health care or health-service centers also face minimum project costs. The minimum is $17.5 million in municipalities above 200,000 people and $10 million in municipalities below 200,000. It is $5 million in qualified incentive tracts or government-restricted municipalities.

Low occupancy costs commercial developers credits

Starting in eligibility year four, commercial Aspire projects must average at least 60% occupancy across each tax period's months. Falling below 60% forfeits all otherwise available credits for the developer and co-applicant that period and later periods. Credits resume for the period when occupancy reaches 60% and the authority verifies it. Residential projects are exempt.

Community benefits bring duties for developers

Aspire redevelopment projects costing at least $10 million generally need a community benefits agreement with the authority and host county or municipality. Agreements provide community benefits, such as job training or local hiring commitments, plus a community advisory committee and annual public report. Developers must certify compliance annually or risk award cancellation or credit recovery. Special-mission nonprofit projects and projects in government-restricted municipalities with all housing reserved for low- and moderate-income households are exempt. Qualifying existing approval letters or redevelopment agreements, or municipal resolutions adopted after public hearings, can satisfy the requirement.

Worker protections add duties for developers

Construction and covered building-services workers on Aspire projects must receive prevailing wages during the eligibility period, with commercial lease compliance clauses. Building-services rules exclude residential tenants and generally commercial occupants below 5,000 square feet; a tenant doing work and occupying over 55% can trigger whole-building coverage. Specified wage violations can delay credits or forfeit 50% or up to 100% until compliance is verified. Before award signing, labor harmony agreements are generally required for retail or hospitality businesses above 10 employees and distribution centers above 20. This applies only while the State has a proprietary interest and acts as a market participant; written findings that the project cannot proceed can support a waiver.

Credit holders gain time but face limits

Developers can use Aspire credits for the covered tax period, issuance period, or another eligibility-period tax period without amending an earlier return. Eligible unused developer credits carry forward for seven tax periods; partnership owners share credits proportionally or through a filed allocation agreement. Transferred credits can cover their designated period, issuance period, or the next three tax periods without amending the issuance-period return. Transferees can carry unused credits forward for five successive tax periods before they expire. Per-period use is capped at total credit divided by credit-term years for developers, or eligibility-period years for transferred credits; developers cannot reduce corporation business tax below its statutory minimum.

Developer reports gain deadlines and safeguards

Developers must file annual compliance reports, certified under penalty of perjury, from the award year through the eligibility period. Reports must address known compliance problems; the first can omit a permanent occupancy certificate, which belongs in the next report after receipt. The authority can extend annual reporting or certification deadlines case by case. Once it preliminarily finds a report complete, it has 120 days to approve it and request credit issuance, or ask for more information. Inaction means approval and entitlement to a certificate, but program violations can still cause credit reductions, forfeiture, or other enforcement.

Developers can sell credits with limits

Developers can sell or assign Aspire credits in the certificate-receipt tax period instead of claiming them, in portions of at least $25,000. They generally must receive at least 85% of face value, excluding allowed present-value discounting. Newly built residential projects can accept less with a plan committing proceeds to project completion. Projects receiving the specified federal 4% housing credits must receive at least 65% and submit the plan to both state development and housing finance agencies. Buyers and assignees cannot sell, assign, or transfer the certificate again.

Developers get phased options and deadlines

Aspire projects generally must finish and obtain a certificate of occupancy within four years after signing the award agreement. Phased completion requires eligible costs above $50 million, and the authority can allow these projects up to six years. Agreements must state the award and eligibility period, plus investment requirements and start and finish deadlines for each phase and overall. Developers must file progress reports; missing or unsatisfactory reports can lead to cancellation, and awards canceled in their approval year can be reassigned. Developers can sell buildings during the eligibility period under authority rules.

Sponsors & Cosponsors

Cosponsors

Verlina Reynolds-Jackson
Democratic • House
Shanique Speight
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 165 • No: 49

House vote • 12/19/2024

3RDG FINAL PASSAGE

Yes: 49 • No: 22

House vote • 12/19/2024

MOTION TAB MOTION

Yes: 41 • No: 27

Senate vote • 12/19/2024