N.J. Admin. Code § 19:31X-1.10

Current through Register Vol. 57, No. 1, January 6, 2025

Section 19:31X-1.10 - Recapture, decertification, and redemption

(a) Absent extenuating circumstances or written consent by the Authority, if a tax credit purchaser fails to fund at least 80 percent of any component of its strategic commitment, the Authority shall require the tax credit purchaser to pay, to the Fund, the amount equal to the difference between the value of such strategic commitment component, as set forth in the tax credit purchaser contract, and the actual amount funded by the tax credit purchaser.

(b) If, at any time, the Authority determines that a tax credit purchaser made a material misrepresentation on the tax credit purchaser's tax credit bid application or any submissions to the Authority under this program, the Authority may recapture any or all of all tax credits awarded under the program, which shall be in addition to any other remedies in the tax credit purchaser contract and any criminal or civil penalties to which the tax credit purchaser and the respective officer may be subject. Any such recapture amount may include interest on the recapture amount, at a rate equal to the statutory rate for tax deficiencies, plus any statutory penalties, and all costs incurred by the Authority and the Division of Taxation in the Department of the Treasury in connection with the pursuit of the recapture amount, including, but not limited to, counsel fees, court costs, and other costs of collection. The Authority shall confer with the Division of Taxation to determine the recapture amount.

(c) The Authority shall review each qualified venture firm's annual report for the disqualifying criteria set forth at N.J.A.C. 19:31X-1.7(d), or other reasonable industry-accepted standards, as determined by the Authority. The Authority shall publish any such standards on its website. Upon such review, if the qualified venture firm does not satisfy the criteria or standards, the Authority shall decertify a qualified venture firm. If the annual report does not demonstrate best efforts to comply with the diversity policies or plans submitted pursuant to N.J.A.C. 19:31X-1.7(b)8 or, for a qualified venture firm that proposed to dedicate a greater portion of qualified investments into qualified businesses located within incentive areas, best efforts to achieve such greater portion of qualified investments compared to the investment information provided pursuant to N.J.A.C. 19:31X-1.7(b)17, then the Authority shall reduce the qualified venture firm's evaluation score by the weight for such criteria. If the reduced evaluation score is below the minimum, the Authority shall decertify the qualified venture firm. Decertification shall not affect any previously made qualified investment or the Fund's commitment to make a follow-on investment in a qualified business.

(d) If a qualified venture firm fails to timely submit the completed annual report pursuant to N.J.A.C. 19:31X-1.9 for two consecutive years, the Authority shall decertify the qualified venture firm and may remove the qualified venture firm from the Evergreen special purpose vehicle or require the qualified venture firm to terminate the Evergreen special purpose vehicle.

(e) If a qualified venture firm fails to comply with the requirements of the qualified venture firm agreement or Evergreen special purpose vehicle governing agreement other than the failure to submit a complete annual report, or if the qualified venture firm or affiliate of the qualified venture firm is removed from the qualified venture firm active fund, the Authority may withhold or cease paying management fees and direct expenses, decertify the qualified venture firm, remove the qualified venture firm from the Evergreen special purpose vehicle, or require the qualified venture firm to terminate the Evergreen special purpose vehicle.

(f) If, at any time, the Authority determines that a qualified venture firm made a material misrepresentation on the qualified venture firm's application for certification, application for a qualified investment, annual report, or any submissions to the Authority under this program, the Authority shall cease paying management fees and direct expenses. The Authority shall decertify the qualified venture firm and may demand repayment of all management fees and direct expenses previously paid, remove the qualified venture firm from the Evergreen special purpose vehicle, or require the qualified venture firm to terminate the Evergreen special purpose vehicle. The actions by the Authority pursuant to this subsection shall be in addition to any other remedies in the qualified venture firm agreement or the Evergreen special purpose vehicle governing agreement and any criminal or civil penalties to which the qualified venture firm and the respective officer may be subject.

(g) If an Evergreen special purpose vehicle is terminated pursuant to (d), (e), or (f) above, the qualified venture firm shall transfer the shares of stock to the Authority. The Authority may, at its discretion, accept payment of an amount equal to the greater of the qualified investment and all follow-on investments or the fair market value of the qualified investment at the time of the demand. Upon such termination, the Authority may require the qualified venture firm to forfeit any carried interest.

(h) If a qualified business fails to support its business operations in this State as set forth at N.J.A.C. 19:31X-1.7(g)4i, or fails to provide the necessary documentation to demonstrate its compliance, during two consecutive years during the qualified business compliance period, the Authority may require the qualified business to redeem the shares of stock purchased with the qualified investment and any follow-on investment for an amount equal to the greater of the aggregate amount of the qualified investment and follow-on investments or the fair market value of the shares of stock at the time of the redemption demand. The Authority may, at its discretion, accept the offer to purchase the shares of stock by the qualified venture firm or any other investor in lieu of redemption.

(i) If a qualified business fails to comply with any requirement under this program other than the failure set forth at (h) above, the Authority may determine not to make any follow-on investments or may demand a redemption as set forth at (h) above.

(j) If, at any time, the Authority determines that a qualified business made a material misrepresentation on the qualified venture firm's application for certification, application for a qualified investment, annual report, or any submissions to the Authority under this program, the Authority may determine not to make any follow-on investments or may demand a redemption as set forth at (h) above. The actions by the Authority pursuant to this subsection shall be in addition to any other remedies in the qualified business side agreement and any criminal or civil penalties to which the qualified business and the respective officer may be subject.

(k) In determining whether to require the termination of an Evergreen special purpose vehicle or the redemption of the shares of stock of a qualified business, the Authority may consider if retaining the Evergreen special purpose vehicle or the shares of stock of the qualified business furthers the purposes of the program, including, but not limited to, the likelihood of an increase in value of the shares of stock and the continued employment of full-time employees filling a position in New Jersey.

N.J. Admin. Code § 19:31X-1.10

Amended by R.2023 d.052, effective 5/1/2023.
See: 54 N.J.R. 1185(a), 55 N.J.R. 961(b),.
In (b), substituted "tax credit purchaser contract" for "incentive award agreement"; and in (j), substituted "qualified business side" for "incentive award".

Recodified from 19:31-25.10 56 N.J.R. 807(a), effective 5/6/2024