SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
[First Reprint]
ASSEMBLY, No. 5378
with committee amendments
STATE OF NEW JERSEY
DATED: JUNE 26, 2025
The Senate Budget and Appropriations Committee reports favorably and with committee amendments Assembly Bill No. 5378 (1R).
As amended and reported, this bill expands eligibility under the Cultural Arts Incentives Program (program), authorizes the New Jersey Economic Development Authority (authority) to accept applications on a rolling basis, and revises certain provisions concerning tax credits awarded under the program. The bill also revises certain provisions of law related to the New Jersey Aspire Program (Aspire Program).
Applicant Eligibility
Under current law, certain entities that qualify as a “cultural arts institution” may apply for tax credits to finance the development or rehabilitation of a cultural arts institution facility under the program. Among other requirements to be eligible for tax credits, a cultural arts institution is required to: (1) have the primary mission and specific policy goal of cultural, educational, or artistic enrichment of the people of this State; (2) operate and maintain the cultural arts institution facility; and (3) own or lease space in the cultural arts institution facility.
This bill amends current law to provide an exception to the requirement that a cultural arts institution have the primary mission and specific policy goal of cultural, educational, or artistic enrichment of the people of this State. Under the bill, an entity may qualify as a cultural arts institution so long as the entity has a mission of, or experience in, cultural, educational, or artistic enrichment of the people of this State. The bill also expands the scope of cultural arts institutions to include any nonprofit that operates a museum or memorial honoring New Jersey veterans of foreign military conflicts, as well as any developer that has a partnership agreement with the National Park Service.
Additionally, the bill amends the definition of “cultural arts institution facility” under current law to include, without limitation, an aquarium, botanical society, historical society, library, museum, gallery, performing arts center, national historical park, war memorial or museum, or any related facility that is principally for the support and benefit of any of the foregoing.
The bill also amends current law to provide an exception to the requirements that a cultural arts institution operate and maintain, and either own or lease space in, the cultural arts institution facility. Under the bill, these requirements do not apply if the cultural arts institution facility is to be operated by the National Park Service.
Operating Reserve
This bill removes a provision of current law that authorizes the authority to award to certain cultural arts institutions, in addition to the tax credit award otherwise provided for under the program, a tax credit valued at up to 100 percent of an operating reserve, as determined by the authority. Current law defines an “operating reserve” to mean an unrestricted fund balance set aside to stabilize a nonprofit’s finances to mitigate against unexpected events, losses of income, and large unbudgeted expenses.
Construction Prior to Application Date
Under current law, an applicant is required to demonstrate that construction has not commenced at the site of the cultural arts project prior to submitting an application, unless the authority determines that the cultural arts project would not be completed without an award of tax credits under the program.
This bill amends this requirement to permit some construction prior to the submission of an application, provided that the construction activities are limited to general maintenance, demolition, environmental assessment, environmental investigation, and environmental remediation. Furthermore, if an applicant has commenced construction on a project before the submission of an application, the bill authorizes the applicant to include, within the required minimum $5 million capital investment for a proposed cultural arts project, costs incurred before application that would have otherwise qualified as project costs.
Application Process
Current law requires the authority to implement a competitive application process for the program. Instead, this bill requires the authority to conduct a review of applications on a rolling basis, unless the authority determines that demand is likely to exceed available tax credits, at which time the authority may instead implement a competitive application process whereby the authority is required to evaluate all applications submitted by a date certain as if all were submitted on that date.
Under current law, an application is required to demonstrate that a cultural arts institution will partner with one or more local community organizations that provide support and services to Work First New Jersey program recipients, in order to provide work activity opportunities and other appropriate services to Work First New Jersey program recipients. The bill amends this provision to require instead that an application demonstrate, unless the cultural arts institution facility is to be operated by the National Park Service, that the cultural arts institution either: (1) will provide support and services to Work First New Jersey program recipients during the eligibility period; or (2) has provided support and services to Work First New Jersey program recipients on or after December 21, 2023.
Use of Transferred Tax Credits
Under current law, the transferee to whom a tax credit certificate is transferred under the program may carry forward all or part of the tax credit amount in any of the next five successive tax periods.
This bill amends this provision to permit a transferee to use the credit in the tax period for which it was issued, in the tax period in which it was issued, or in any of the next three successive tax periods. Under the bill, the transferee may first use the credit against tax liabilities in the tax period in which it was issued or in a succeeding tax period, as authorized in the bill, without the need to amend the tax return for the tax period for which the credit was issued, subject to the provisions of this section. The transferee may carry forward an unused credit for use in any of the next five successive tax periods, and the unused credit expires thereafter.
New Jersey Aspire Program Revisions
Under current law governing the Aspire Program, the term “health care or health services center” is defined as an establishment that consists of not less than 10,000 square feet devoted to health care or health services, where patients are admitted for or seek examination and treatment by one or more physicians, dentists, psychologists, or other medical practitioners, and which is located in a municipality with a Municipal Revitalization Index (MRI) distress score of at least 50, a distressed municipality, or a qualified incentive tract. This bill expands this definition to additionally include such an establishment that is located on land owned by the federal government of the United States on or before December 31, 2005.
This bill also provides that, for applications submitted under the Aspire Program on or after the bill’s effective date, a redevelopment project is deemed to constitute a project of special economic importance if the redevelopment project is a health care or health services center that: is associated with, and located on, the same complex as a new or existing university, academic, or medical research center, institution, or facility; is an establishment that is associated with a National Cancer Institute Designated Comprehensive Cancer Center that is engaged in cancer research; is a transformative expansion of healthcare services by an academic medical and research center located in a distressed municipality that is adjacent to existing clinical facilities; or is a project located at a State-designated trauma center.
Availability of Certain Uncommitted Tax Credits
The bill provides that if the authority awards less than the annual limitation of tax credits allocated for the Aspire Program and the Emerge Program, not including transformative projects, then up to $500 million of the uncommitted credits may also be made available to cultural arts institutions awarded a tax credit pursuant to the Cultural Arts Incentives Program Act, among other purposes for which the authority may use such uncommitted credits under current law.
Grow New Jersey Program
Under current law, a business may elect to suspend certain Grow New Jersey Program obligations for the 2020, 2021, 2022, 2023, or 2024 tax period, or any combination thereof, due to the COVID-19 pandemic, provided that the business makes such election in writing to the authority before the issuance of the tax credit for the corresponding tax year. This bill extends that deadline so that a business may suspend those obligations, provided that the business make such election in writing to the authority no later than December 31, 2025, without a requirement that the suspended obligations for the 2020, 2021, 2022, 2023, or 2024 tax period be due to the COVID-19 pandemic.
Repeal of New Jersey Community-Anchored Development Act
Under current law, a total of $1.2 billion in tax credits may be awarded under the program and the New Jersey Community-Anchored Development Program. The authority is scheduled to begin accepting applications under the New Jersey Community-Anchored Development Program in 2026.
This bill repeals the New Jersey Community-Anchored Development Act that established the New Jersey Community-Anchored Development Program.
As amended and reported by the committee, Assembly Bill No. 5378 (1R) is identical to Senate Bill No. 4255 (1R), which was also amended and reported by the committee on this date.
COMMITTEE AMENDMENTS:
The committee amended the bill to:
(1) expand the definition of “cultural arts institution” to include any entity that has a mission of, or experience in, cultural, educational, or artistic enrichment of the people of this State, rather than having the mission and specific policy goal of cultural, educational, or artistic enrichment of the people of this State;
(2) include within the definition of a “cultural arts institution” any nonprofit that operates a museum or memorial honoring New Jersey veterans of foreign military conflicts, as well as any developer that has a partnership agreement with the National Park Service. The amendments also remove language that would have included the National Park Service within this definition;
(3) expand the definition of “cultural arts institution facility” to include a national historic park and a war memorial or museum;
(4) remove a provision of the bill that would have amended the current definition of “project cost” to exclude costs incurred by a cultural arts institution for construction activities undertaken prior to the date of application for the program;
(5) permit a cultural arts institution to include costs incurred before the date of application within the required minimum $5 million capital investment for a proposed cultural arts project, provided that the costs would have otherwise qualified as project costs;
(6) remove language from the bill that would have exempted a cultural arts institution facility to be operated by a developer that has a partnership agreement with the cultural arts institution from the requirement to demonstrate the structure and terms of the financial, corporate, and real estate instruments to be utilized to operate the cultural arts institution facility;
(7) remove “necessary repairs” from the list of construction activities for which an exception is provided to the requirement that construction not have commenced at the site of a cultural arts project prior to submitting an application;
(8) amend a current application requirement to provide that, unless the cultural arts institution facility is to be operated by the National Park Service, demonstrate that the cultural arts institution either: (a) will provide support and services to Work First New Jersey program recipients during the eligibility period; or (b) have provided support and services to Work First New Jersey program recipients on or after December 21, 2023. Under current law, an application is required to demonstrate that during the eligibility period the cultural arts institution will partner with one or more local community organizations that provide support and services to Work First New Jersey program recipients, in order to provide work activity opportunities and other appropriate services to Work First New Jersey program recipients;
(9) remove language from the bill that would have exempted a cultural arts institution facility to be operated by a developer that has a partnership agreement with the cultural arts institution from the requirement to demonstrate that the cultural arts institution will have ownership of, or lease space in, the cultural arts institution facility and operate or hold an operating agreement for at least the eligibility period;
(10) amend the definition of “health care or health services center” under the Aspire Program to mean an establishment that consists of not less than 10,000 square feet devoted to health care or health services, where patients are admitted for or seek examination and treatment by one or more physicians, dentists, psychologists, or other medical practitioners, and which is located in a municipality with an MRI distress score of at least 50, a distressed municipality, or a qualified incentive tract, or is located on land owned by the federal government of the United States on or before December 31, 2005. Under current law, location on land owned by the federal government on or before December 31, 2005 is not included in this definition;
(11) provide that, for applications submitted under the Aspire Program on or after the bill’s effective date, a redevelopment project is deemed to constitute a project of special economic importance if the redevelopment project is a health care or health services center that: is associated with, and located on, the same complex as a new or existing university, academic, or medical research center, institution, or facility; is an establishment that is associated with a National Cancer Institute Designated Comprehensive Cancer Center that is engaged in cancer research; is a transformative expansion of healthcare services by an academic medical and research center located in a distressed municipality that is adjacent to existing clinical facilities; or is a project located at a State-designated trauma center;
(12) provide that if the authority awards less than the annual limitation of tax credits under the New Jersey Aspire Program and the Emerge Program, then up to $500 million of the uncommitted credits may also be made available to cultural arts institutions awarded a tax credit pursuant to the Cultural Arts Incentives Program Act; and
(13) extend the deadline to suspend certain obligations under the Grow New Jersey Act until December 31, 2025, removing a current requirement that the suspended obligations for the 2020, 2021, 2022, 2023, or 2024 tax period be due to the COVID-19 pandemic.
FISCAL IMPACT:
Fiscal information for this bill is currently unavailable.