New Jersey § 34:1b-312

§ 34:1b-312.

The purpose of the New Jersey Community-Anchored Development Act is for the New Jersey

Economic Development Authority to facilitate, in partnership with the State's key

not-for-profit and governmental anchor institutions, large-scale development projects

with desirable employment and geographical characteristics that are to impact a broader

community. The Legislature finds that where a broad commonality of goals exists between anchor

institutions and the State, the authority can effectively utilize anchor institutions

as investors in, and additional overseers of, projects that the authority seeks to

incentivize. Under the legislation, anchor institutions in the areas of education, health care,

culture, community development, and economic development are provided with the opportunity

to act as investors in targeted development, utilizing proceeds from the sale of State

tax credits. This approach harnesses the deep experience of the numerous anchor institutions

in the State, institutions that enjoy decades-long relationships with communities

around the State, making them ideal partners for companies wanting to come to or expand

in New Jersey. This legislation seeks to overcome cost-of-occupancy differences between New Jersey

and less expensive options in other jurisdictions for specific properties by reducing

the cost of occupancy being offered to a targeted company. This legislation represents a shift in State economic development policy from a

grant model to an investment model, differing significantly from past award models

in that the legislation does not provide a certain dollar amount to private employers

based on the number and types of jobs being created or preserved in the State. The legislation affords an opportunity for an anchor institution and the authority

to become partners in a project, with the authority receiving a negotiated current

or deferred economic return on the tax credit investment made by the anchor institution

and ultimately the return of the amount initially invested. Through a competitive application process to the authority, a real estate partnership

between an anchor institution and a partner business will make its case for an amount

of tax credits necessary for that project to be able to establish occupancy costs

at a competitive level. By its inclusion of designated federal opportunity zones and areas eligible to be

designated as federal opportunity zones as a separate basis for projects to receive

tax credits, the legislation seeks to incentivize anchor institutions to look beyond

the borders of their host communities, permitting them to invest in other locales

that lack strong anchor institutions, thus expanding their influence and impact by

doing so. Simultaneously, such investments will further the objectives of the State in attracting

high-value employers and in providing economic stimulus to areas of the State that

prior investment cycles have overlooked. The legislation is also expansive enough to permit the addition of other beneficial

uses to a qualifying project; including housing, public amenities, parking, mixed

uses, and facilities of an anchor institution itself. The tax credits issued by the authority to an applicant anchor institution are to

be issued pursuant to a tax credit agreement that sets forth negotiated terms on which

the authority has agreed to issue the credits. The tax credit agreement is to include standards relating to the anticipated economic

results of the community-anchored project and address accountability in the event

that the community-anchored project fails to meet the requirements specified in the

tax credit agreement. The Legislature declares that two principal objectives underscore the policy approach

of this legislation: first, an incentive program cannot succeed as a one-size-fits-all

structure, and therefore an award of tax credits is to be thoroughly underwritten

by the authority and specifically designed for scenarios in which the authority finds

that the award will be effective; and second, the State is better served where the

State's financial support is characterized and treated as an investment rather than

an explicit grant.