LEGISLATIVE FISCAL ESTIMATE
[Second Reprint]
SENATE, No. 4135
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JANUARY 7, 2026
SUMMARY
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Synopsis: |
Provides allowances for certain redevelopment projects undertaken by institutions of higher education or distressed hospitals under New Jersey Aspire Program. |
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Type of Impact: |
Multi-year decrease in State revenues. |
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Agencies Affected: |
New Jersey Economic Development Authority. |
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Office of Legislative Services Estimate |
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Fiscal Impact |
Multi-Year Lifespan of Tax Credit Awards |
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State Revenue Decrease |
Indeterminate |
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· The Office of Legislative Services (OLS) finds that the bill will result in an indeterminate multi-year decrease in State revenues.
· By allowing developers to receive tax credits for certain redevelopment projects undertaken by institutions of higher education and distressed hospital projects, the bill may result in a State revenue loss because it allows the Economic Development Authority to award tax credits to developers for costs associated with these institutional projects and distressed hospital projects.
· Using information available through the authority, the OLS estimates that there were approximately $1.6 billion in uncommitted tax credits available for award through the New Jersey Aspire and Emerge Programs as of December 15, 2025. Of that amount, approximately $1.4 billion in tax credits may be awarded to non-transformative projects and $200.0 million may be awarded to transformative projects.
BILL DESCRIPTION
This bill modifies certain provisions of current law to allow certain redevelopment projects undertaken by institutions of higher education and distressed hospital projects to qualify to tax credits under the New Jersey Aspire Program.
The bill defines a “distressed hospital project” as a health care or health services center, hospital, or hospital system that: (1) operates a minimum of four general acute care hospitals licensed by the State; (2) incurred average annual expenses not less than $250,000 for the provision of charity care services, not including the value of charity care subsidies or reimbursements received through any governmental assistance program, as measured by the five most recent calendar years, immediately preceding the date of application for the program, for which audited financial statements are available; and (3) is owned or leased by an organization that is exempt from federal taxation pursuant to section 501(c)(3) or the federal Internal Revenue Code, including any wholly-owned subsidiary of an exempt organization, which organization or subsidiary has filed a bankruptcy petition pursuant to Title 11 of the United States Code.
To qualify for an incentive award under the Aspire Program, the bill provides that the developer of an institutional project is required to contribute capital of at least $30.0 million, regardless of the overall cost of the project, except when the project is located in a government-restricted municipality. The bill exempts the developer of a distressed hospital project from this requirement. For a distressed hospital project, the bill authorizes the inclusion of land costs, in an amount not to exceed 20 percent of the eligible project cost, with the calculation of the total project cost. The bill permits the developer of a distressed hospital project to elect an eligibility period not to exceed five years, rather than require an eligibility period not to exceed 10 years for such a project. The eligibility period is the period during which a developer may claim a tax credit.
The bill also exempts distressed hospital projects from the evaluation of the project’s rate of return on investments and related requirements, including a requirement that a developer pay up to 20 percent of the amount in excess of the reasonable and appropriate rate of return on investment. The bill authorizes the authority to rescind an award and recapture all or part of any tax credits awarded, including all or part of any tax credits claimed by the developer, if a distressed hospital project ceases to operate any general acute care hospital during the eligibility period.
The bill also provides that institutional projects and distressed hospital projects are not subject to the net benefit analysis that is required for certain other redevelopment projects. Under current law, an exemption from the net benefit analysis is provided for investments in residential projects, food delivery sources, and health care or health services centers. The bill also provides that a distressed hospital project is eligible for an incentive award equal to 85 percent of project costs, not to exceed a maximum value of $120.0 million. An institutional project is eligible for an incentive award equal to 80 percent of project costs, not to exceed a maximum value of $120.0 million.
The bill provides similar changes for institutional projects and distressed hospital projects that qualify as transformative projects under the New Jersey Aspire Program. Specifically, the bill provides that a distressed hospital project is eligible for an incentive award equal to 85 percent of project costs, while an institutional project is eligible for an incentive award equal to 80 percent of project costs. In both instances, the incentive award is capped at $400.0 million or the amount of the project financing gap. The bill also exempts institutional projects and distressed hospital projects from the net benefit analysis requirement for transformative projects.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
According to the Carnegie Classification of Institutions of Higher Education, the New Jersey Institute of Technology, Princeton University, and Rutgers University-New Brunswick have a research activity designation of Research 1 (R1), while Kean University, Montclair State University, Rowan University, Rutgers University-Camden, Rutgers University-Newark, Seton Hall University, and Stevens Institute of Technology have a research activity designation of Research 2 (R2).
Using information available through the authority, the OLS estimates that there were approximately $1.6 billion in uncommitted tax credits available for award through the New Jersey Aspire and Emerge Programs as of December 15, 2025. Of that amount, approximately $1.4 billion in tax credits may be awarded to non-transformative projects and $200.0 million may be awarded to transformative projects. Current law allows New Jersey Aspire Program tax credits allocated for non-transformative projects to be transferred to support transformative projects if the amount of tax credits otherwise available for transformative projects is less than $1.0 billion and the authority’s board determines that the transfer is warranted based on such criteria as the authority deems appropriate.
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Section: |
Revenue, Finance and Appropriations |
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Analyst: |
Staff Fiscal and Budget Analyst |
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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.).