SENATE BUDGET AND APPROPRIATIONS COMMITTEE
STATEMENT TO
SENATE, No. 3097
STATE OF NEW JERSEY
DATED: JUNE 24, 2024
The Senate Budget and Appropriations Committee reports
favorably Senate Bill No. 3097.
This bill modifies certain deadlines for certain existing projects
under the Economic Redevelopment and Growth Grant program
(program) and modifies the definition of “project cost” for purposes of
the program.
Temporary Certificate of Occupancy Deadlines
This bill extends the deadline for a developer to submit a
temporary certificate of occupancy for certain qualified residential
projects or mixed use parking projects from June 30, 2026 to June 30,
2028. Specifically, this extension would apply for any residential
project or mixed use parking project: (1) that was approved after May
1, 2017; (2) that is located in a Garden State Growth Zone with a
population over 125,000, except not including those projects located in
Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester,
Ocean, and Salem counties; and (3) for which the municipality in
which the project is located submitted a letter of support to the chief
executive officer of the New Jersey Economic Development Authority
identifying up to six projects prior to July 1, 2018.
This bill also extends the deadline for a municipal redeveloper to
submit a temporary certificate of occupancy for certain proposed
mixed use parking projects from June 30, 2026 to June 30, 2028. This
extension would apply for any mixed use parking project: (1) that is
undertaken by a municipal redeveloper after July 29, 2022; (2) for
which a redevelopment incentive grant is awarded; and (3) that is
located in a Garden State Growth Zone with a population over
125,000, except not including those projects located in Atlantic,
Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, and
Salem counties.
Modified Projects
Additionally, the bill permits the developers of certain mixed use
parking projects to exclude a visitor center, youth center, or both from
the project application, or to assign the application to a municipal
redeveloper, provided that the project otherwise qualifies as a mixed-
use parking project. This permission to amend or assign an application
applies to any mixed use parking project: (1) that is undertaken by a
municipal redeveloper after July 29, 2022; (2) for which a 2
redevelopment incentive grant is awarded; (3) that is located in a
Garden State Growth Zone with a population over 125,000, except not
including those projects located in Atlantic, Burlington, Camden, Cape
May, Cumberland, Gloucester, Ocean, and Salem counties; and (4)
that was initially intended to be utilized by a visitor center or youth
center within or adjacent to a national historic park.
Under current law, the redevelopment incentive grant award for
such a project is equal to 100 percent of the total project costs
allocated to the parking component combined with 80 percent of the
total project costs allocated to the non-parking component. Under the
bill, the maximum amount of any redevelopment incentive grant for
the modified project would be determined in the same manner as for
an unmodified project.
Project Cost
This bill revises the definition of the term “project cost,” for the
purposes of the program, to include among other costs: capitalized
interest paid to third parties, the funding of a debt service reserve fund,
the cost of infrastructure improvements, including ancillary
infrastructure projects, and an amount not to exceed 20 percent of the
total project cost for costs not directly related to construction.
The bill also provides that, for purposes of the definition of
“project cost,” capitalized interest paid to third parties is deemed to be
costs directly related to construction.
FISCAL IMPACT:
The Office of Legislative Services (OLS) finds that the bill will
result in an indeterminate net increase in State costs. The Economic
Redevelopment and Growth Grant program is administered by the
Economic Development Authority.
By expending the definition of project cost to include costs
associated with the funding of a debt services reserve fund in total
projects costs, the bill may result in a State revenue loss because it
allows a developer to receive an incentive grant or tax credit award in
an amount greater than otherwise permitted under current law.
The OLS notes that provisions of the bill allowing the developers
of certain mixed use parking projects to exclude a visitor center or
youth center, or both, from the project application, or to assign the
application to a municipal redeveloper, would have an indeterminate
impact on State finances. The impact of these provisions will vary,
depending on whether a project is eliminated from a project
application or reassigned to a municipal redeveloper. The elimination
of a project from an application may result in a reduction in a
developer’s incentive grant or tax credit award, thereby reducing State
expenditures and revenue losses. In contrast, the reassignment of
project to a municipal redeveloper may result in a recalculation of total
project costs resulting in a larger tax credit award to the extent the
reassignment enables the completion of approved projects.
The bill may also result in a State revenue loss by extending the
deadline for a developer to submit a temporary certificate of 3
occupancy for certain qualified projects to June 30, 2028. Through the
Economic Redevelopment and Growth Grant Program, the authority
awards incentive grants or tax credits for a portion of project costs
incurred in connection with the redevelopment project by a developer
until the issuance of a permanent certificate of occupancy. Extending
the deadline for the submission of a temporary certificate of occupancy
may allow additional project costs to be counted in the calculation of
the incentive grant or tax credit awards.
Additionally, a developer that has been awarded an incentive grant
or tax credit does not receive their final incentive grant or tax credit
award until they submit a certificate of occupancy to the authority.
The deadline extension proposed by the bill may allow developers to
receive larger incentive grants or tax credit awards over a longer
period of time, resulting in additional State revenue losses.