N.J. Admin. Code § 19:31AA-1.6

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

Section 19:31AA-1.6 - Financing gap and initial operating shortfall

(a) For an application for a financing gap tax credit, the Authority shall review the proposed total development cost and evaluate and validate the project financing gap estimated by each applicant applying for an incentive award, as follows:

1. The Authority shall evaluate the proposed total development costs to develop, and the components of, the project against reasonable market costs and components of comparable projects;

2. The Authority shall determine if the applicant's submitted financial information for the project is satisfactory. If satisfactory, the Authority shall incorporate the financial information in the project financing gap analysis, including the reasonable and appropriate return on investment; and

3. The project financing gap analysis shall include, but not be limited to, an evaluation of the total development cost, amount of capital sufficient to complete the project, proposed rental rates, vacancy rates, reasonable and appropriate return on investment, and, in the Authority's sole discretion, a comparison to alternative financing structures for a comparable project available to the applicant. If the supermarket or grocery store is a component of a facility, the Authority shall additionally consider the reasonable and appropriate return on investment of the facility and may adjust the reasonable and appropriate return on investment of the supermarket or grocery store so that together the supermarket or grocery store and the facility yield a reasonable and appropriate return on investment.

(b) For an application for an initial operating cost tax credit, the Authority shall review the proposed initial operating costs, and evaluate and validate the initial operating shortfall estimated by each applicant applying for an incentive award, as follows:

1. The Authority shall evaluate the proposed initial operating costs against reasonable market costs to operate, and components of, the project against reasonable market costs and components of comparable projects. The applicant shall also provide written verification from the landlord, if applicable, about the proposed rent;

2. The Authority shall determine if the applicant's submitted financial information for the project is satisfactory. If satisfactory, the Authority shall incorporate the financial information in the initial operating shortfall analysis, including the reasonable and appropriate net operating profit; and

3. The initial tax credit shortfall analysis shall include, but not be limited to, an evaluation of the initial operating costs, proposed rental rates paid to the landlord, proposed rental rates or fees paid by sub-tenants or licensees, and the reasonable and appropriate net operating profit.

N.J. Admin. Code § 19:31AA-1.6

Recodified from 19:31-28.6 56 N.J.R. 807(a), effective 5/6/2024