N.J. Admin. Code § 19:31A-1.1

Current through Register Vol. 56, No. 12, June 17, 2024

Section 19:31A-1.1 - Program description

(a) The Authority is empowered to guarantee a portion of the principal amount of a financing which would increase or maintain employment and/or tax ratables in New Jersey, and which would not be made without the guarantee.

(b) The Authority is empowered to own and lease equipment and/or real estate to eligible applicants.

(c) There are four types of guarantees available: Fixed Asset Guarantees, Working Capital Guarantees, Special Guarantees, and Smart Growth Pre-Development Guarantees.

1. Pursuant to the Fixed Assets Guarantee program:

i. The Authority may guarantee the lesser of $ 2.0 million or 90 percent of the principal amount of the financing.

ii. The financing can either be:

(1) A taxable or tax-exempt Authority-issued bond financing (see N.J.A.C. 19:31); or

(2) Any other form of financing other than as stated at (b)1ii(1) above, including, but not limited to, bank loans, lease financing, seller take-back financing, Federal take-back financing and financings described at (b)3ii(1) and (2) below ("conventional financing");

iii. Proceeds of guaranteed conventional financing can be used for the acquisition of land, buildings, machinery and equipment, the expansion of an existing building or the renovation of machinery, equipment, and buildings; and

iv. Use of the proceeds of tax-exempt bond financing is governed by the Internal Revenue Code.

2. Pursuant to the Working Capital Guarantee program:

i. The Authority may guarantee the lesser of $ 1.5 million or 90 percent of the principal amount of the financing;

ii. The financing can be either a conventional financing or an Authority-issued tax-exempt or taxable bond (see N.J.A.C. 19:31), subject to the terms and conditions of the Internal Revenue Code; and

iii. The financing proceeds can be used for refinancing of existing debt, purchase of inventory, or operating expenses.

3. Pursuant to the Special Guarantee program:

i. The Authority may guarantee any amount;

ii. The Authority guarantee shall be of:

(1) A loan or guarantee from a governmental entity which may be the Federal or State government, a department of the Federal or State government, an agency of the Federal or State government or a political subdivision of the State of New Jersey;

(2) A loan made under the Community Lending Program of the Federal Home Loan Bank of New York;

(3) Bonds issued by the Authority as a part of a bond issue for the benefit of multiple borrowers (whether or not such bond issue consists of multiple series of bonds issued for the benefit of individual borrowers);

(4) Conventional financing. An applicant for a conventional financing guarantee shall:

(A) Be in an industry and municipality that is targeted by the Authority as set forth at N.J.A.C. 19:30-5;

(B) Demonstrate to the Authority that it has viable options to vacate the State or locate to another state, has been offered economic incentives by the competing state and that, without the special guarantee the applicant will not undertake the relocation or expansion in the State; and

(C) Create or maintain a minimum of 200 permanent full-time jobs in the State. The Authority's assistance shall not exceed $ 65,000 per full-time job created and/or maintained; or

(5) Structured finance assistance. For purposes of this sub-subparagraph and the transaction documents, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise:

" Base years" means the first two complete calendar years following the approval by the members provided, however, that, at its discretion, an approved applicant may notify the Authority that the base years have terminated prior to such date, and further provided that in those instances where significant construction/renovation of the project requires a certificate of occupancy to be awarded prior to occupancy of the project site, the base years will commence upon the issuance of a certificate of occupancy by the municipality.

" Designated industries" means a business engaged in the field of biotechnology, pharmaceuticals, financial services, transportation and logistics, advanced computing, advanced materials, electronic device technology, environmental technology or medical device technology as these terms are more particularly defined at N.J.A.C. 19:31I-1.2.

" Disaster recovery center" means a redundant facility used to house back-up systems to be used in the event of a business interruption at the primary facility of the business.

" Employment compliance period" means with respect to net new full-time permanent jobs to be created, the five consecutive years immediately following the base years. Compliance with other covenants required by the transaction documents may be longer than the employment compliance period.

" Full-time permanent job" means a job filled by a full-time employee as that term is defined at N.J.A.C. 19:31I-1.2.

" Manufacturing business" means a business in which more than 50 percent of the business conducted is the transformation of raw materials into finished goods for sale.

" Net new full-time permanent job" means the full-time permanent jobs created. "Net new full-time permanent job" shall not include any person who was previously employed in New Jersey by the business or by a related person as defined at N.J.S.A. 54:10A-5.5 if the employee is transferred to the business which is the subject of the application unless the employee's position at his or her previous employer is filled by a new employee.

" Structured finance assistance" means the program set forth in this sub-subparagraph, whereby the Authority purchases machinery, equipment, furniture, leasehold improvements or construction materials using the sales tax exemption granted to the Authority pursuant to N.J.S.A. 54:32B-9 and leases such items to an approved applicant.

(A) Eligibility. In order to be eligible for structured finance assistance, an applicant shall:

I. Demonstrate that the project is a designated industry as that term is defined at N.J.A.C. 19:31I-1.2; and is located either in a Metropolitan Planning Area (PA 1), Suburban Planning Area (PA 2), designated center or an area designated for growth in a plan that has been endorsed by the New Jersey State Planning Commission at N.J.S.A. 52:18A-196 et seq.;

II. Demonstrate to the Authority that it has viable options to locate the project out of the State, has been offered economic incentives by a competing state and that, without the structured finance assistance, the applicant will not relocate or expand the project in the State;

III. Create a minimum 10 net new full-time permanent jobs for manufacturing businesses and designated industries. For disaster recovery centers which will increase the tax base of the State or any political subdivision of the State, the Authority may waive the requirement for the creation of net new full-time permanent jobs.

IV. For manufacturing businesses and designated industries, demonstrate that the business is making a minimum capital investment in the facility of $ 10,000,000. For disaster recovery centers, demonstrate that the business is making a minimum capital investment in the facility of $ 15,000,000.

V. The business is not eligible for assistance under structured finance if the business is eligible for assistance under the Sales Tax Exemption component of the Business Retention and Relocation Assistance Act, P.L. 2004, c. 65, as amended. The business is not eligible for assistance under structured finance if the business has entered into an agreement for a Business Employment Incentive Program Grant at the project site (P.L. 1996, c. 26, as amended).

(B) Program requirements. Eligible applicants for structured finance assistance must comply with the following requirements:

I. The Authority's exposure (if any) shall not exceed $ 65,000 per full-time permanent job;

II. The maximum time allowed for acquisition of machinery, equipment, furniture and fixtures, leasehold improvements or construction materials shall be five years from the approval by the members of the project although the actual lease term may be for a longer period; and

III. Structured finance assistance shall have a rolling cap of $ 40 million of sales tax benefit per two-year period based on the State's fiscal year. In the event that the rolling cap is met, the EDA may seek the approval of the State Treasurer to exceed the cap and shall only proceed with the administration of the sales tax benefit with the State Treasurer's written approval. By example, if the sales tax benefit approved in fiscal year 1 was $ 18 million, the amount available for approval in fiscal year 2 would be $ 22 million.

(C) If a firm does not meet their projections for net new full-time permanent jobs, it shall return to the State a proportionate percentage of the sales tax benefit.

(D) Fees are as follows:

I. A non-refundable application fee of $ 1,000 shall accompany every application for assistance.

II. A closing fee of $ 25,000 shall be paid to the Authority by the business at the time of closing.

III. A lease origination fee equal to 10 percent of the sales tax benefit shall be paid to the Authority by the business at the lease tranche closing(s), as they occur.

IV. A sales and use tax exemption letter fee of $ 500.00 per year for each year a letter is issued by the Authority shall be paid to the Authority by the business.

V. An asset re-acquisition fee equal to 10 percent of the residual value of the machinery, equipment, furniture and fixtures shall be paid to the Authority by the business. The residual value will have a floor of one percent of the original purchase price and sales tax allocable to the residual value.

4. Pursuant to the Smart Growth Pre-development Guarantee Program:

i. The amount of the Authority guarantee shall not exceed $ 1.0 million;

ii. The financing can be either a conventional financing or an Authority-issued tax-exempt or taxable bond (see N.J.A.C. 19:31), subject to the terms and conditions of the Internal Revenue Code;

iii. The financing proceeds shall be used for the purposes of pre-development site preparation costs to be determined by the Authority. Such costs may include, but are not limited to, land assemblage, demolition, removal of materials and debris and engineering costs; and

iv. Applicants for Smart Growth Pre-development Guarantee shall have projects which must be located either in Planning Areas 1 or 2, designated centers or in municipalities with endorsed plans as defined by the State Redevelopment Plan, must evidence municipal support and be part of a local redevelopment plan.

(d) Both the Fixed Asset guarantee and the Working Capital guarantee have a maximum term of 10 years for the guarantee, although the financing can be for a longer term. Smart Growth Pre-development guarantees have a maximum term of three years. A Special Guarantee term shall not exceed the term of the financing. Film Production Assistance Program guarantee terms will be determined on a project-by-project basis. Factors to be considered in determining the terms of the guarantee are as set forth at N.J.A.C. 19:31A-1.4.

N.J. Admin. Code § 19:31A-1.1

Amended by R.1997 d.270, effective 7/7/1997.
See: 29 N.J.R. 1485(b), 29 N.J.R. 2844(b).
In (b), substituted "three types" for "two types" and added "and Special Guarantees"; in (b)1ii(1), inserted "Authority issued"; added (b)1ii(2); substantially amended (b)2ii; in (b)iii, substituted "financing proceeds" for "loan proceeds"; inserted (b)3; and in (c), added last sentence.
Amended by R.2000 d.297, effective 7/17/2000.
See: 32 N.J.R. 1705(a), 32 N.J.R. 2602(c).
Inserted a new (b); recodified former (b) and (c) as (c) and (d); and in the new (c)3, inserted "or locate to another state" following "State" in ii(4)(B), and substituted a reference to companies for a reference to existing New Jersey companies in iii.
Amended by R.2000 d.482, effective 12/4/2000.
See: 32 N.J.R. 3555(a), 32 N.J.R. 4275(b).
Inserted (c)3ii(5).
Amended by R.2001 d.242, effective 7/16/2001.
See: 33 N.J.R. 1567(a), 33 N.J.R. 2495(b).
In (b), deleted the second sentence; rewrote (c).
Amended by R.2004 d.139, effective 4/5/2004.
See: 36 N.J.R. 143(a), 36 N.J.R. 1787(b).
In (c), rewrote the introductory paragraph and added 4; in (d), added the last sentence.
Amended by R.2004 d.346 and d.347, effective 9/20/2004.
See: 36 N.J.R. 2305(a), 36 N.J.R. 4321(a), 36 N.J.R. 2616(a), 36 N.J.R. 4322(a).
Rewrote (c); in (d), added the second sentence.
Amended by R.2005 d.274, effective 8/15/2005.
See: 37 N.J.R. 1714(a), 37 N.J.R. 3058(a).
Rewrote (c).
Amended by R.2005 d.319, effective 9/19/2005.
See: 37 N.J.R. 2153(a), 37 N.J.R. 3722(a).
In (c), added definitions "Designated industries", "Disaster recovery center", and "Manufacturing business", rewrote definitions "Employment compliance period" and "Net new full-time permanent job", rewrote (A), deleted former (C), recodified and rewrote former (D) as (C), added (D).
Amended by R.2008 d.89, effective 4/7/2008.
See: 39 N.J.R. 5071(a), 40 N.J.R. 1927(b).
In (c)2i, substituted "$ 1.5 million" for "$ 1 million".
Amended by R.2009 d.38, effective 1/20/2009.
See: 40 N.J.R. 5954(a), 41 N.J.R. 638(a).
Deleted (c)6.
Amended by R.2010 d.285, effective 12/6/2010.
See: 42 N.J.R. 2019(a), 42 N.J.R. 2969(a).
In the introductory paragraph of (c), substituted "four" for "five", and deleted "Film Production Program Assistance Guarantees" following "Special Guarantees,"; deleted (c)4; and recodified (c)5 as (c)4.
Amended by R.2014 d.187, effective 12/15/2014.
See: 46 N.J.R. 1682(a), 46 N.J.R. 2420(a).
In the introductory paragraph of (c), substituted "Pre-Development" for "Pre-development", in (c)3ii(4)(C) and (c)3ii(5)(B)I, substituted "$ 65,000" for "$ 50,000"; and in (c)3ii(4)(C), inserted "full-time".

Recodified from 19:31-2.1 56 N.J.R. 807(a), effective 5/6/2024