LEGISLATIVE FISCAL ESTIMATE

ASSEMBLY, No. 4619

STATE OF NEW JERSEY

221st LEGISLATURE

 

DATED: JULY 3, 2024

 

 

SUMMARY

 

Synopsis:

Modifies certain provisions of Historic Property Reinvestment and Brownfields Redevelopment Incentive programs.

Type of Impact:

Multi-year net decrease in State revenues.

Agencies Affected:

New Jersey Economic Development Authority.

 

 

Office of Legislative Services Estimate

Fiscal Impact

Multi-Year Life Span of Tax Credit Awards 

 

Net State Revenue Decrease

Indeterminate

 

 

 

 

·         The Office of Legislative Services (OLS) concludes that the bill will result will result in a net loss of State revenues over a multi-year period.  The bill increases the maximum tax credit awards under the Historic Property Reinvestment Program and the Brownfields Redevelopment Program and extends eligibility for tax credit awards under each program to new types of projects.

·         The provisions of the bill increasing the maximum amount of tax credits that may be awarded to an individual project through either program will result in a State revenue loss to the extent that the developers of qualified properties and redevelopment projects qualify for larger tax credit awards than permitted under current law.

·         By requiring a business to demonstrate that a project financing gap exists only for projects located outside of a government-restricted municipality with rehabilitation or remediation cost of $5 million, the bill will result in a State revenue loss because certain projects may qualify for tax credits for which they are not eligible under current law.

·         The provisions of the bill allowing the Economic Development Authority to award tax credits to facade rehabilitation projects or a for a redevelopment project erecting a solar panel array on the site of a closed sanitary landfill will result in a State revenue loss to the extent that it allows developers to receive tax credits for which they are not eligible under current law.

BILL DESCRIPTION

 

      The bill revises various provisions of the New Jersey Economic Recovery Act of 2020 concerning the Historic Property Reinvestment Program and the Brownfields Redevelopment Incentive Program.  The Historic Property Reinvestment Program provides tax credits on a competitive basis to support the rehabilitation of identified historic properties.  The Brownfields Redevelopment Incentive Program provides project-based tax credits to incentivize environmental remediation, abatement, and demolition activities that will allow for the redevelopment of brownfield sits for commercial, retail, or mixed use.  Both of these programs are administered by the Economic Development Authority.

      The bill increases the maximum tax credit award for projects eligible for tax credit awards under both programs, regardless of where the project is located.  The bill also allows the authority to award tax credits to facade rehabilitation projects and for a redevelopment projects involving the erection of a solar panel array on the site of a closed sanitary landfill. 

      The bill amends the project financing gap requirements for both programs.  Current law requires applicants to demonstrate that a project financing gap exists for all projects, without regard to where that project is located.  The bill amends current law governing both programs to provide that a business must demonstrate a project financing gap only for projects located outside of a government-restricted municipality that have total rehabilitation costs, total facade rehabilitation costs, or total remediation costs of at least $5 million.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS concludes that the bill will result will result in a net loss of State revenues over a multi-year period.  The OLS notes that the any revenue loss will be: a) temporally limited because current law places restrictions on the time period during which the authority may award tax credits through each program and b) spread out over several years since unused tax credits awarded under the Historic Property Reinvestment Program may be carried forward for up to nine privilege periods following the privilege period in which the credit was first allowed.  Current law does not allow for the carry forward of unused tax credits awarded under the Brownfields Redevelopment Incentive Program.

      The provisions of the bill increasing the maximum amount of tax credits that may be awarded to an individual project through either program will result in a State revenue loss to the extent that the developers of qualified properties and redevelopment projects qualify for larger tax credit awards permitted under current law.

      By revising the tax credit eligibility requirement for a business to demonstrate a project financing gap so that it applies only to projects located outside of a government-restricted municipality that have total rehabilitation costs, total façade rehabilitation costs, or total remediation costs of at least $5 million, the bill will result in a State revenue loss to the extent that these modifications allow developers to receive tax credits for which they may not be eligible under current law.

      The provision of the bill allowing the Economic Development Authority to award tax credits to facade rehabilitation projects or a for a redevelopment project erecting a solar panel array on the site of a closed sanitary landfill will result in a State revenue loss to the extent that it allows developers to receive tax credits for which they are not eligible under current law.

      Current law provides the total amount of tax credits awarded annually through the Historic Property Reinvestment Program and the Brownfields Redevelopment Incentive Program at $50 million each during the first six years of the nine-year period following enactment of the New Jersey Economic Recovery Act of 2020.  Although the bill increases the maximum amount of tax credits that may be awarded to eligible projects and the types of projects that may qualify for tax credit awards, the bill does not alter the current statutory tax credit cap for each program. 

 

 

Section:

Revenue, Finance, and Appropriations

Analyst:

Scott A. Brodsky

Staff Fiscal & Budget Analyst

Approved:

Thomas Koenig

Legislative Budget and Finance Officer

 

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).