N.J. Admin. Code § 19:31U-1.3

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

Section 19:31U-1.3 - Eligibility criteria

(a) A business eligible pursuant to this section may submit an application to the Authority in accordance with the provisions of section 72 at P.L. 2020, c. 156 and N.J.A.C. 19:31U-1.5 on or after May 20, 2021, the effective date of this subchapter, but prior to March 1, 2027.

(b) The Authority shall make the determination that an applicant has met the criteria for eligibility for a tax award and shall determine the amount of the award. In order for a business to be eligible for tax credits under the program, the chief executive officer of the business or an equivalent officer shall demonstrate to the Authority at the time of application that:

1. The business will make, acquire, or lease a capital investment at the qualified business facility equal to or greater than the applicable amount set forth at (c) below;

2. The business will create or retain new and retained full-time jobs in the State in an amount equal to or greater than the applicable minimum number of new or retained full-time jobs required to be eligible as set forth at (d) below. To qualify as an eligible position or full-time job, the business must demonstrate to the Authority's satisfaction that the employee spends at least 80 percent of the individual's work time in this State and that the eligible position requires an employee to have the individual's primary place of work in this State;

3. The qualified business facility is located in a qualified incentive area;

4. The award of tax credits will be a material factor in the business's decision to create or retain the number of new and retained full-time jobs set forth in its application, except that:

i. The award of tax credits shall not be considered a material factor in the creation or retention of full-time jobs filled by employees providing professional services, as defined at N.J.S.A. 14A:17-3(1), and their direct administrative support staff, unless as of the date of the business's application, the full-time job is filled by an employee whose primary business office is located outside of the State. Direct administrative support staff shall not include employees in information technology, human resources, or employee relations positions; and

ii. In determining whether a position provides professional services subject to (b)4i above, the Authority shall consider several factors, including, but not limited to, whether the business is a small business or whether the preponderance of its customer base is located within this State;

5. The award of tax credits, the capital investment resultant from the award of tax credits, and the resultant creation and retention of new and retained full-time jobs will yield a net positive economic benefit, as calculated by the Authority, to the State equaling at least 400 percent of the requested tax credit allocation amount except as listed at (b)5i and ii below. For a phased project, the requested tax credit allocation amount for the initial phase shall equal at least 400 percent of the requested tax credit allocation amount except as listed at (b)5i and ii below, and, for each phase thereafter, the cumulative net positive economic benefit shall equal at least 400 percent of the requested tax credit allocation amount except as listed at (b)5i and ii below. The net positive economic benefit determination shall be calculated prior to considering the value of the requested tax credit under the program and shall be based on the benefits generated during the period of time from approval through the end of the commitment period. The net positive economic benefit may be based on the benefits generated through the end of the longer period of extended commitment that the business may elect for purposes of receiving credit for benefits projected to occur after the expiration of the commitment period, pursuant to (b)5iv below.

i. An award of tax credits to a business for a qualified business facility located in a distressed municipality or an enhanced area shall yield a net economic positive benefit to the State, based on the benefits generated during the period of time from approval through the end of the commitment period, that equals at least 300 percent of the requested tax credit amount.

ii. An award of tax credits to a business for a qualified business facility located in a government-restricted municipality, or for a mega project, shall yield a net positive economic benefit to the State, based on the benefits generated during the period of time from approval through the end of the commitment period, that equals at least 200 percent of the requested tax credit amount.

iii. The net positive economic benefits calculated for all projects shall be evaluated by the Authority on a present value basis with the requested tax credit allocation amount discounted to present value at the same discount rate as the benefits from capital investment resultant from the award of tax credits and the resultant retention and creation of full-time jobs as provided at (b)5iv below.

iv. A business may elect a period of extended commitment beyond the commitment period for which time the economic benefits shall be creditable by the Authority to the determination of the net positive economic benefit of the project. In no event, shall the period for which the net positive economic benefit be determined, including any extended commitment period, exceed 20 years. A business electing a period of extended commitment and failing to maintain the project through the expiration of that extended commitment period shall be obligated to repay a proportion of the incremental benefits received on account of having extended the commitment period, taking into consideration the number of years of extended commitment during which the business maintained the project.

v. If, during the term of the program, the methodology used by the Authority in projecting the net positive economic benefits of a project in making the determination required pursuant to this paragraph is modified, the Authority may adjust, prospectively, the respective percentage thresholds by which the benefits must exceed the requested tax credit allocation amount set forth pursuant to this paragraph to ensure consistent application of the respective percentage thresholds. Any modification to the methodology shall be applied prospectively. Prospective application means using the modified methodology or respective percentages to pending applications and to projects that have been previously approved if the business requests a modification, or this subchapter or the commitment agreement requires or authorizes the Authority to conduct a reevaluation of the net positive economic benefit;

6. The qualified business facility shall be in compliance with minimum environmental and sustainability standards upon completion of the project;

7. The project shall comply with the Authority's affirmative action requirements, adopted pursuant to section 4 at P.L. 1979, c. 303 (N.J.S.A. 34:1B-5.4) and N.J.A.C. 19:30-3; and

8. Each worker employed to perform construction work or building services work at the qualified business facility shall be paid not less than the prevailing wage rate for the worker's craft or trade, as determined by the Commissioner of the Department of Labor and Workforce Development pursuant to P.L. 1963, c. 150 (N.J.S.A 34:11-56.25 et seq.) and P.L. 2005, c. 379 (N.J.S.A. 34:11-56.58 et seq.).

i. The payment of prevailing wage pursuant to this paragraph shall not apply if:

(1) The work performed under the contract is performed at a qualified business facility owned by a landlord that is not a business receiving Authority assistance;

(2) The landlord is a party to the construction contract, building services contract, or both; and

(3) The qualified business facility constitutes a lease of less than 35 percent of the entire facility at the time of contract and under any agreement to subsequently lease the qualified business facility.

ii. In accordance with section 1 at P.L. 1979, c. 303 (N.J.S.A. 34:1B-5.1), nothing in this paragraph shall be construed as requiring the payment of prevailing wage for construction commencing more than two years after the Authority has issued the first certificate of compliance pursuant to paragraph (2) of subsection a. of section 77 at P.L. 2020, c. 156 and N.J.A.C. 19:31U-1.10(d).

iii. The payment of prevailing wages for building services work shall apply for the duration of the commitment period.

(c) The minimum capital investment required to be eligible pursuant to (b)1 above shall be the sum of (c)1 through 5 below, as applicable, provided that to the extent a business's qualified business is comprised of more than one of the uses at (c)1, 2, 3, or 4 below, the minimum investment for common areas will be in proportion to the other areas.

1. For the rehabilitation, improvement, fit-out, or retrofit of an existing industrial, warehousing, logistics, or research and development portion of the premises for continued similar use by the business, a minimum investment of $ 20.00 per square foot of gross leasable area;

2. For the new construction of an industrial, warehousing, logistics, or research and development portion of the premises for use by the business, a minimum investment of $ 60.00 per square foot of gross leasable area;

3. For the rehabilitation, improvement, fit-out, or retrofit of an existing portion of the premises that does not qualify pursuant to (c)1 or 2 above, a minimum investment of $ 40.00 per square foot of gross leasable area;

4. For the new construction of a portion of the premises that does not qualify pursuant to (c)1 or 2 above, a minimum investment of $ 120.00 per square foot of gross leasable area;

5. For a small business, no new minimum capital investment shall be required, provided the applicant has demonstrated evidence satisfactory to the Authority of its intent to remain in the State for the commitment period. Such evidence may include, but is not limited to, a proposed lease, membership agreement, or similar commitment for space; and

6. In the event the business invests less than the amount set forth at (c)1 above in the qualified business facility, the business shall donate the uninvested balance to the infrastructure fund established pursuant to section 79 at P.L. 2020, c. 156 and N.J.A.C. 19:31U-1.18, which donation shall not be included in the net positive economic benefit analysis pursuant to (b)4 above or the full economic analysis pursuant to N.J.A.C. 19:31U-1.7(d).

(d) The minimum number of new or retained full-time jobs required to be eligible pursuant to (b)2 above shall be as set forth at (d)1 through 5 below. A business may be eligible for a tax credit award for both new and retained full-time jobs if the business separately satisfies the corresponding minimum number for new and retained full-time jobs.

1. For a small business, 25 percent growth of its workforce with new full-time jobs within the eligibility period. The small business shall submit a growth plan, which specifies the number of new full-time employees that the eligible business will hire each year of the eligibility period in the State provided that by the end of the eligibility period, the eligible business shall have a minimum of 25 percent growth of its workforce with new full-time jobs;

2. For a business engaged primarily in a targeted industry that does not qualify as a small business, 25 new full-time jobs;

3. For any business not set forth at (d)1 or 2 above, a minimum of 35 new full-time jobs;

4. For a business eligible for new full-time jobs pursuant to (d)2 or 3 above, the business shall also be eligible for retained full-time jobs in addition to the new full-time jobs if the business will retain: 150 retained full-time jobs when locating in a government-restricted municipality; 250 retained full-time jobs when locating in a qualified incentive tract or enhanced area municipality; or 500 retained full-time jobs when locating anywhere else in the State;

5. For a business not eligible pursuant to (d)2, 3, or 4 above, which is locating in a qualified incentive tract, enhanced area, or government-restricted municipality, the greater of 500 retained full-time jobs or the business's retained full-time jobs at the time of application; and

6. For any business not set forth at (d)5 above, the greater of 1,000 retained full-time jobs or the business's retained full-time jobs at the time of application.

(e) In addition to the requirements at (b), (c), or (d) above, a business shall provide and adhere to the following. The requirements set forth in this subsection may be modified by the Authority to respond to an emergency, disaster, or other factors that result in employees of an eligible business having to work from a location other than the qualified business facility:

1. A plan that demonstrates that the qualified business facility is capable of accommodating more than half of the business's new and retained full-time employees as approved, as determined by the Authority in its sole discretion by considering square footage allocable to eligible positions. The business shall adhere to such plan to complete its project.

2. A certification by the chief executive officer of the business or an equivalent officer, under the penalty of perjury, that not less than 80 percent of the withholdings of new and retained full-time jobs are, and will be, subject to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq.

(f) The chief executive officer of the business, or an equivalent officer, shall certify that all factual representations made by the business to the Authority pursuant to (b), (c), and (d) above are true under the penalty of perjury.

(g) For a qualified business facility that is a complex of buildings:

1. The minimum capital investment required pursuant to (b) above and for purposes of qualifying as a mega project shall be aggregated only for buildings that are proximate, as determined by the Authority in its sole discretion. In all other instances, each building in a complex shall meet a minimum capital investment required pursuant to (b) above. Proximate buildings shall include, but not be limited to, buildings that are adjacent to each other or across a single public right-of-way from each other. The following are examples of complexes of buildings that are proximate:

i. A complex of buildings consists of building A and building B, which are both on the same block, but separated by other buildings.

ii. A complex of buildings will consist of building A and building B, which will be adjacent to each other, but have separate entrances.

iii. A complex of buildings consists of building A and building B, which are located in an industrial park and are separated solely by a parking lot.

2. The minimum number of new or retained full-time jobs may be met in the aggregate in a complex of buildings.

(h) For a non-gaming business facility within an established Tourism District to qualify as a tourism destination project, the facility shall have a significant impact on the economic viability of the Tourism District within which it is located by satisfying the following:

1. Having a capital investment in excess of $ 50,000,000, at which more than 250 full-time employees of a business are created or retained; and

2. Demonstrating to the satisfaction of the Authority a combination of two or more of the following as a result of the project:

i. Positive financial benefit to the Tourism District;

ii. A net increase in visitors to the Tourism District;

iii. An increase in marketing dollars spent on the Tourism District; or

iv. The addition of unique amenities or services to the Tourism District, which amenities or services may be located at the project.

(i) A business shall be treated as the owner of a qualified business facility if it holds fee simple title to the facility, whether it ground leases the land underlying the facility for at least 50 years or holds title to the land underlying the facility.

(j) A business may apply for tax credits under the program for more than one project through one or more applications. However, the Authority may, in its sole discretion, consider two or more applications as one application for one project based on factors including, but not limited to, the location of the qualified business facilities, the types of jobs proposed, and the business's financing and operational plans.

N.J. Admin. Code § 19:31U-1.3

Amended by R.2022 d.058, effective 5/16/2022.
See: 54 N.J.R. 124(a), 54 N.J.R. 909(b).
Rewrote (b). (c), (d), (e) and (f).

Recodified from 19:31-22.3 56 N.J.R. 807(a), effective 5/6/2024