Bill Text: NJ S2370 | 2010-2011 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Revises financial assistance under Business Retention and Relocation Assistance Grant Program; repeals requirement to study implementation.

Spectrum: Moderate Partisan Bill (Democrat 27-7)

Status: (Passed) 2011-01-06 - Approved P.L.2010, c.123. [S2370 Detail]

Download: New_Jersey-2010-S2370-Introduced.html

SENATE, No. 2370

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED OCTOBER 18, 2010

 


 

Sponsored by:

Senator  FRED H. MADDEN, JR.

District 4 (Camden and Gloucester)

Senator  JOSEPH M. KYRILLOS, JR.

District 13 (Middlesex and Monmouth)

 

Co-Sponsored by:

Senators T.Kean, A.R.Bucco, Goodwin, Oroho and Sweeney

 

 

 

 

SYNOPSIS

     Revises financial assistance under Business Retention and Relocation Assistance Grant Program; repeals requirement to study implementation.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act concerning the Business Retention and Relocation Assistance Grant Program, amending P.L.1996, c.25 and P.L.2004, c.65, and repealing section 11 of P.L.1996, c.25.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 2 of P.L.1996, c.25 (C.34:1B-113) is amended to read as follows:

     2.    As used in this act:

     ["Advanced computing" means a technology used in the designing and developing of computing hardware and software, including innovations in designing the full spectrum of hardware from hand-held calculators to super computers, and peripheral equipment;

     "Advanced computing company" means a person with headquarters or base of operations  located in New Jersey and engaged in the research, development, production, or provision of advanced computing for the purpose of developing or providing products or processes for specific commercial or public purposes;

     "Advanced materials" means materials with engineered properties created through the development of specialized processing and synthesis technology, including ceramics, high value-added metals, electronic materials, composites, polymers, and biomaterials;

     "Advanced materials company" means a person with headquarters or base of operations located in New Jersey and engaged in the research, development, production, or provision of advanced materials for the purpose of developing or providing products or processes for specific commercial or public purposes;]

     "Affiliate" means an entity that directly or indirectly controls, is under common control with, or is controlled by the business.   Control exists in all cases in which the entity is a member of a controlled group of corporations as defined pursuant to section 1563 of the Internal Revenue Code of 1986 (26 U.S.C. s.1563) or the entity is an organization in a group of organizations under common control as defined pursuant to subsection (b) or (c) of section 414 of the Internal Revenue Code of 1986 (26 U.S.C. s.414).  An entity may establish by clear and convincing evidence, as determined by the Director of the Division of Taxation in the Department of the Treasury, that control exists in situations involving lesser percentages of ownership than required by those statutes;

     "Authority" means the New Jersey Economic Development Authority created pursuant to P.L.1974, c.80 (C.34:1B-1 et seq.);

     ["Biotechnology" means the continually expanding body of fundamental knowledge about the functioning of biological systems from the macro level to the molecular and sub-atomic levels, as well as novel products, services, technologies and sub-technologies developed as a result of insights gained from research advances which add to that body of fundamental knowledge;

     "Biotechnology company" means a person with headquarters or base of operations located in New Jersey and engaged in the research, development, production, or provision of biotechnology for the purpose of developing or providing products or processes for specific commercial or public purposes, including, but not limited to, medical, pharmaceutical, nutritional, and other health-related purposes, agricultural purposes, and environmental purposes, or a person with headquarters or base of operations located in New Jersey and engaged in providing services or products necessary for such research, development, production, or provision;]

     "Business retention or relocation grant of tax credits" or "grant of tax credits" means a grant which consists of the value of corporation business tax credits against the liability imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) or credits against the taxes imposed on insurers pursuant to P.L.1945, c.132 (C.54:18A-1 et al.), section 1 of P.L.1950, c.231 (C.17:32-15), and N.J.S.17B:23-5, provided to fund a portion of retention and relocation costs pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.);

     "Certificate of compliance" means a certificate issued by the authority pursuant to section 9 of P.L.1996, c.25 (C.34:1B-120);

     ["Commissioner" means the Executive Director of the New Jersey Commerce Commission;

     "Department" means the New Jersey Commerce Commission;]

     "Business" means an employer located in this State that has operated continuously in the State, in whole or in part, in its current form or as a predecessor entity for at least 10 years prior to filing an application pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.) and which is subject to the provisions of R.S.43:21-1 et seq. and may include a sole proprietorship, a partnership, or a corporation that has made an election under Subchapter S of Chapter One of Subtitle A of the Internal Revenue Code of 1986, or any other business entity through which income flows as a distributive share to its owners, limited liability company, nonprofit corporation, or any other form of business organization located either within or outside the State.  A business shall include an affiliate of the business if that business applies for a credit based upon any capital investment made by an affiliate or based upon retained full-time jobs of an affiliate;

     "Capital investment" means expenses that the business incurs following its submission of an application to the authority pursuant to section 5 of P.L.1996, c.25 (C.34:1B-116), but prior to the Capital Investment Completion Date, as shall be defined in the project agreement, for:  a. the site preparation and construction, repair, renovation, improvement, equipping, or furnishing of a building, structure, facility, or improvement to real property; and b. obtaining and installing furnishings and machinery, apparatus or equipment for the operation of a business in a building, structure, facility or improvement to real property;

     "Chief executive officer" means the chief executive officer of the New Jersey Economic Development Authority;

     "Commitment duration" means the tax credit term and five years from the [date] end of the tax credit term specified in the project agreement entered into pursuant to section 5 of P.L.1996, c.25 (C.34:1B-116);

     "Designated industry" means [a business engaged in the field of biotechnology, pharmaceuticals, manufacturing, financial services or transportation and logistics, advanced computing, advanced materials, electronic device technology, environmental technology or medical device technology] an industry identified by the authority as desirable for the State to maintain, which may be designated and amended via the promulgation of rules by the authority to reflect changing market conditions;

     "Designated urban center" means an urban center designated in the State Development and Redevelopment Plan adopted by the State Planning Commission;

     ["Electronic device technology" means a technology involving microelectronics, semiconductors, electronic equipment, and instrumentation, radio frequency, microwave, and millimeter electronics, and optical and optic-related electrical devices, or data and digital communications and imaging devices;

     "Electronic device technology company" means a person with headquarters or base of operations located in New Jersey and engaged in the research, development, production, or provision of electronic device technology for the purpose of developing or providing products or processes for specific commercial or public purposes;]

     "Eligible position" means a full-time position retained by a business in this State for which a business provides employee health benefits under a group health plan as defined under section 14 of P.L.1997, c.146 (C.17B:27-54), a health benefits plan as defined under section 1 of P.L.1992, c.162 (C.17B:27A-17), or a policy or contract of health insurance covering more than one person issued pursuant to Article 2 of Title 17B of the New Jersey Statutes;

     "Full-time employee" means a person [who is employed for consideration for at least thirty-five hours a week, or who renders any other standard of service generally accepted by custom or practice as full-time employment, whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., and who is determined by the commissioner to be employed in a permanent position according to criteria as the  Board of Directors of the New Jersey Commerce Commission may prescribe.  "Full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the business. "Full-time employee" shall not include a child, grandchild, parent, or spouse of an individual who has direct or indirect ownership of at least 5% of the profits, capital, or value of the business] employed by the business for consideration for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice, as determined by the authority, as full-time employment, or a person who is employed by a professional employer organization pursuant to an employee leasing agreement between the business and the professional employer organization, in accordance with P.L.2001, c.260 (C.34:8-67 et seq.) for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice, as determined by the authority, as full-time employment, and whose wages are subject to withholding as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. or an employee who is a resident of another State but whose income is not subject to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. or who is a partner of a business who works for the partnership for at least 35 hours a week, or who renders any other standard of service generally accepted by custom or practice, as determined by the authority, as full-time employment, and whose distributive share of income, gain, loss, or deduction, or whose guaranteed payments, or any combination thereof, is subject to the payment of estimated taxes, as provided in the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq. "Full-time employee" shall not include any person who works as an independent contractor or on a consulting basis for the business;

     ["Headquarters" of a business means the single location that serves as the national administrative center of the business, at which the primary office of the chief executive officer or chief operating officer of the business, as well as the offices of the management officials responsible for key businesswide functions such as finance, legal, marketing, and human resources, are located;

     "High-technology business" means an advanced computing company, advanced materials company, electronic device technology company, environmental technology company or medical device technology company;

     "Medical device technology" means a technology involving any medical equipment or product (other than a pharmaceutical product) that has therapeutic value, diagnostic value, or both, and is regulated by the federal Food and Drug Administration;

     "Medical device technology company" means a person with headquarters or base of operations located in New Jersey and engaged in the research, development, production, or provision of medical device technology for the purpose of developing or providing products or processes for specific commercial or public purposes;]

     "New business location" means the premises to which a business will relocate that the business has either purchased or built or for which the business has entered into a purchase agreement or a written lease for a period of no less than the commitment duration or eight years, whichever is greater, from the date of relocation.  A "new business location" also means the business's current location or locations if the business makes a capital investment equal to the total value of the business retention or relocation grant of tax credits to the business at that location or locations;

     ["Manufacturing facility" means a business location at which more than 50% of the business personal property that is housed in the facility is eligible for the sales tax exemption pursuant to subsection a. of section 25 of P.L.1980, c.105 (C.54:32B-8.13) for machinery, apparatus or equipment used in the production of tangible personal property;]

     "Program" means the Business Retention and Relocation Assistance Grant Program created pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.);

     "Project agreement" means an agreement between a business and the [department] authority that sets the forecasted schedule for completion and occupancy of the project, the date the commitment duration shall commence, the amount and tax credit term of the applicable grant of tax credits, and other such provisions which further the purposes of P.L.1996, c.25 (C.34:1B-112 et seq.);

     "Qualifying capital investment" means a capital investment in an amount that is at least twice that of the total value of the business retention or relocation grant of tax credits to a business;

     ["Research and development facility" means a business location at which more than 50% of the business personal property that is purchased for the facility is eligible for the sales tax exemption pursuant to section 26 of P.L.1980, c.105 (C.54:32B-8.14) for property used in research and development;]

     "Retained full-time job" means an eligible position that currently exists in New Jersey and is filled by a full-time employee but which, because of a potential relocation by the business, is at risk of being lost to another state or country.  For the purposes of determining a number of retained full-time jobs, the eligible positions of the members of a "controlled group of corporations" as defined pursuant to section 1563 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.1563, shall be considered the eligible positions of a single employer; [and]

     "Tax credit term" means the period of time commencing with the first issuance of tax credits and continuing during the period in which the recipient of a grant of tax credits is eligible to apply the tax credits pursuant to section 7 of P.L.2004, c.65 (C.34:1B-115.3);

     ["Total allowable relocation costs" means $1,500 times the number of retained full-time jobs.  "Total allowable relocation costs" does not include the amount of any bonus award authorized pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1).] ; and

     "Yearly tax credit amount" means $1,500 times the number of retained full-time jobs.  "Yearly tax credit amount" does not include the amount of any bonus award authorized pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1).

(cf: P.L.2007, c.253, s.14)

 

     2.    Section 3 of P.L.1996, c.25 (C.34:1B-114) is amended to read as follows:

     3.    The Business Retention and Relocation Assistance Grant Program is hereby established as a program under the jurisdiction of the New Jersey [Commerce Commission] Economic Development Authority and shall be administered by the [New Jersey Commerce Commission] authority.  The purpose of the program is to encourage economic development and job creation and to preserve jobs that currently exist in New Jersey but which are in danger of being relocated to premises outside of the State.  To implement that purpose, and to the extent that funding for the program is available, the program may provide grants of tax credits [but in no case shall the amount of an individual grant of tax credits exceed 80% of the projected State tax revenues from the retained full-time jobs covered by the project agreement of an applicant for a grant of tax credits].  To be eligible for any grant of tax credits pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.), a business shall demonstrate to the authority, at the time of application, that the grant of tax credits and resultant retention of full-time jobs and any capital investment will yield a net positive benefit to the State.

(cf: P.L.2007, c.253, s.15)

 

     3.    Section 4 of P.L.1996, c.25 (C.34:1B-115) is amended to read as follows:

     4.    a. To qualify for a grant of tax credits, a business shall enter into an agreement to undertake a project to:

     (1)   relocate or maintain a minimum of 50 retained full-time jobs from one or more locations within this State to a new business location or locations in this State; and

     (2)   maintain the retained full-time jobs pursuant to the project agreement for the commitment duration.

     b.    A project that consists solely of point-of-final-purchase retail facilities shall not be eligible for a grant of tax credits.  If a project consists of both point-of-final-purchase retail facilities and non-retail facilities, only the portion of the project consisting of non-retail facilities shall be eligible for a grant of tax credits.  If a warehouse facility is part of a point-of-final-purchase retail facility and supplies only that facility, the warehouse facility shall not be eligible for a grant of tax credits.  For the purposes of this section, catalog distribution centers shall not be considered point-of-final-purchase retail facilities.

(cf: P.L.2007, c.310, s.1)

 

     4.    Section 5 of P.L.2004, c.65 (C.34:1B-115.1) is amended to read as follows:

     5.    a.  In addition to any grant of tax credits determined pursuant to section 7 of P.L.2004, c. 65 (C.34:1B-115.3), a bonus award equivalent to 50% of the amount of the original grant of tax credits shall be made to any business that relocates more than 2,000 full-time employees covered by the project agreement from one or more locations outside of a designated urban center into a designated urban center, provided that all other applicable requirements of P.L.1996, c. 25 (C.34:1B-112 et seq.) are satisfied; and provided further that no grant of tax credits shall be awarded pursuant to this section for any job that is moved from its current location in an urban enterprise zone designated pursuant to the "New Jersey Urban Enterprise Zones Act," P.L.1983, c.303 (C.52:27H-60 et seq.) to a location that is not within an urban enterprise zone; however, that if the move from the urban enterprise zone is to a facility already owned or leased by the same business and that business already employs at least the same number of persons as those being relocated from the urban enterprise zone a grant of tax credits may still be awarded pursuant to this section.

     b.    In addition to any grant of tax credits determined pursuant to section 7 of P.L.2004, c.65 (C.34:1B-115.3), and in addition to any bonus award pursuant to subsection a. of this section, a bonus award equivalent to 50% of the amount of the original grant of tax credits shall be made to any business that makes a qualifying capital investment.  If a bonus award under this section would result in a business's capital investment no longer being a qualifying capital investment, then the bonus award shall equal the largest bonus amount that would still result in the capital investment being a qualifying capital investment.

(cf: P.L.2004, c.65, s.5)

 

     5.    Section 7 of P.L.2004, c.65 (C.34:1B-115.3) is amended to read as follows:

     7.    a. The total value of the grants of tax credits [issued] , approved by the authority pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.) , that may be applied against tax liability in a fiscal year shall not exceed an aggregate annual limit of $20,000,000 [for a fiscal year]The total value of the grants of tax credits, issued pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.), that a single business may apply against its tax liability shall not exceed an aggregate annual limit of $10,000,000 for a fiscal year.  A tax credit issued pursuant to P.L.1996, c.25 may be applied against liability [arising in the tax period in which the tax credit is issued and the tax period next following,] as set forth in subsection b. of this section and shall expire thereafter.

     b.    [Grants] Subject to the limitation set forth in subsection a. of this section, grants of tax credits shall be [awarded and issued to] approved for qualifying businesses [as follows, subject to the limitations of subsection c. of this section] according to the following schedule, and shall be issued upon the execution and satisfaction of the requirements of the project agreement between the authority and the business with an approved project, and annually thereafter:

   [(1) for a project that covers a business relocating a minimum of 500 full-time employees, a grant of tax credits made pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.) shall equal total allowable relocation costs plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1) and, shall be issued immediately upon the entry of the project agreement between the commissioner and the business with an approved project, up to the aggregate annual limit; and

     (2)   for a project that covers a business relocating between 50 and 499 full-time employees, a grant of tax credits shall not be issued until the end of the fiscal year in which the application is approved.]

     (1)   for a project that covers a business relocating or retaining 50 to 250 full-time employees, a grant of tax credits shall be for the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1), and may be applied against liability in the tax period in which the tax credit is issued;

     (2)   for a project that covers a business relocating or retaining 251 to 400 full-time employees, a grant of tax credits shall be for two times the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1), and may be applied against liability in the tax period in which the tax credit is issued and the following tax period, for one-half of the total grant award per tax period, provided that the use of the credit must be accompanied by a certificate of compliance;

     (3)   for a project that covers a business relocating or retaining 401 to 600 full-time employees, a grant of tax credits shall be for three times the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1) and may be applied against liability in the tax period in which the tax credit is issued and the following two tax periods, for one-third of the total grant award per tax period, provided that the use of the credit must be accompanied by a certificate of compliance;

     (4)   for a project that covers a business relocating or retaining 601 to 800 full-time employees, a grant of tax credits shall be for four times the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1) and may be applied against liability in the tax period in which the tax credit is issued and the following three tax periods, for one-fourth of the total grant award per tax period, provided that the use of the credit must be accompanied by a certificate of compliance;

     (5)   for a project that covers a business relocating or retaining 801 to 1,000 full-time employees, a grant of tax credits shall be for five times the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1) and may be applied against liability in the tax period in which the tax credit is issued and the following four tax periods, for one-fifth of the total grant award per tax period, provided that the use of the credit must be accompanied by a certificate of compliance; and

     (6)   for a project that covers a business relocating or retaining 1,001 or more full-time employees, a grant of tax credits shall be for six times the yearly tax credit amount plus any applicable bonus award determined pursuant to section 5 of P.L.2004, c.65 (C.34:1B-115.1) and may be applied against liability in the tax period in which the tax credit is issued and the following five tax periods, for one-sixth of the total grant award per tax period, provided that the use of the credit must be accompanied by a certificate of compliance.

     c.     [If the sum of the amount of tax credits issued pursuant to paragraph (1) of subsection b. of this section in a fiscal year, plus the amount of tax credits approved pursuant to paragraph (2) of subsection b. of this section exceeds] If the issuance of a grant of tax credits pursuant to this section would exceed the $20,000,000 aggregate annual limit, [the commissioner shall reduce, on a pro rata basis, the award to each business receiving a grant of tax credits pursuant to paragraph (2) of subsection b.] the authority may award a smaller grant of tax credits or no grants of tax credits, as necessary to comply with the aggregate annual limit.

(cf: P.L.2007, c.310, s.2)

 

     6.    Section 5 of P.L.1996, c.25 (C.34:1B-116) is amended to read as follows:

     5.    Each business seeking a grant of tax credits for a project shall submit an application for approval of the project to the [commissioner] authority in a form and manner prescribed in regulations adopted by the [commissioner] authority. The application must be submitted to the [commissioner] authority for approval at least 45 days prior to moving to the new business location; provided however, a business relocating 1,500 or more retained full-time jobs to one or more new locations within a designated urban center shall, if relocating to a leased location, submit an application within six months of executing its lease.  The application for approval of a project shall include:

     a.     A schedule of short-term and long-term employment projections of the business in the State based upon the relocation;

     b.    (Deleted by amendment, P.L.2004, c.65.)

     c.     Terms of any lease agreements, either existing or proposed, or details of the purchase or building of the new business location, if applicable;

     d.    An estimate of the projected retained State tax revenues resulting from the relocation;

     e.     A description of the type of contribution the business can make to the long-term growth of the State's economy and a description of the potential impact on the State's economy if the jobs are not retained;

     f.     Evidence that the business or a predecessor entity has been operating, in whole or in part, in this State for at least 10 years prior to the filing of the application;

     g.     Evidence of alternative relocation plans, such as an analysis of the cost effectiveness of remaining in this State versus relocation under the alternative plans;

     h.     A written commitment by the business to maintain 95% of the retained full-time jobs for at least the first two years of the commitment duration, and to maintain a minimum of 90% of the retained full-time jobs for the commitment duration; and

     i.      Any other necessary and relevant information as determined by the [commissioner] authority.

     The [commissioner] authority staff may provide whatever assistance the [commissioner] authority deems appropriate in the preparation of an application for approval of a project and may issue grants of tax credits pursuant to the project agreement entered between the [commissioner] authority and the business [with an approved project at the commissioner's discretion subject to the provisions of P.L.1996, c.25 (C.34:1B-112 et seq.)].

     The project agreement shall include terms establishing the starting date, or event that will determine the starting date, of the commitment duration and any other terms or conditions as determined by the [commissioner] authority.

(cf: P.L.2004, c.65, s.8)

 

     7.    Section 6 of P.L.1996, c.25 (C.34:1B-117) is amended to read as follows:

     6.    No tax credits [shall be] issued as a grant of tax credits under P.L.1996, c.25 (C.34:1B-112 et seq.) may be applied by the business against liability in any year until the State Treasurer has certified that the amount of retained State tax revenue received in the most recently completed State tax periods by the Director of the Division of Taxation from the business equals or exceeds the amount of the grant of tax credits. 

(cf: P.L.2004, c.65, s.9)

 

     8.    Section 7 of P.L.1996, c.25 (C.34:1B-118) is amended to read as follows:

     7.    a.  A business that is receiving a business employment incentive grant pursuant to the provisions of P.L.1996, c.26 (C.34:1B-124 et al.) shall not be eligible to receive a grant of tax credits under P.L.1996, c.25 (C.34:1B-112 et seq.) with respect to a job which is included in the calculation of a grant pursuant to P.L.1996, c.26.

     b.    A business that is receiving any other grant by operation of State law shall be eligible to receive a grant of tax credits under P.L.1996, c.25 (C.34:1B-112 et seq.); provided, however, that a business that is receiving another State grant shall not be eligible to receive assistance with respect to any job that is currently the subject of any other State grant, except for grants from the Office of Customized Training pursuant to the "1992 New Jersey Employment and Workforce Development Act," P.L.1992, c.43 (C.34:15D-1 et seq.), and provided further that a business shall not receive an amount as a grant of tax credits pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.) [which,] unless the State will realize a net positive benefit from the grant of tax credits and resultant retention of full-time jobs and any capital investment when combined with such other grants, [exceeds 80% of the retained State tax revenue,] except upon the approval of the State Treasurer. Amounts received as grants from the Office of Customized Training pursuant to the "1992 New Jersey Employment and Workforce Development Act," P.L.1992, c.43 (C.34:15D-1 et seq.), shall be excluded from the calculation of the total amount permitted under this subsection.

(cf: P.L.2004, c.65, s.10)

 

     9.    Section 11 of P.L.2004, c.65 (C.34:1B-118.1) is amended to read as follows:

     11.  In [determining the] considering the award and the amount of any grant of tax credits made pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.), the [commissioner shall] authority may consider, as part of the [commissioner's] authority's overall [calculation] review process, the following factors:

     a.     The number of full-time jobs retained;

     b.    The quality of the full-time jobs retained, including but not limited to the salaries and benefits provided to retained full-time employees;

     c.     Any capital investments made by the business at the new business location;

     d.    The nature of the business' operations, including but not limited to whether the business is a designated industry;

     e.     The potential impact on the State if the business were to relocate to another state;

     f.     The site of the new business location and its consistency with the smart growth goals, strategies and policies of the State Development and Redevelopment Plan established pursuant to section 5 of P.L.1985, c.398 (C.52:18A-200);

     g.     Whether positions average at least 1.5 times the minimum hourly wage during the commitment duration; and

     h.     The duration and extent of past operations by the business in New Jersey and any other information indicating the business' level of commitment to the State and the likelihood that the business will continue to operate in this State in the future.

(cf: P.L.2004, c.65, s.11)

 

     10.  Section 8 of P.L.1996, c.25 (C.34:1B-119) is amended to read as follows:

     8.    The [commissioner] authority shall, after consultation with the Director of the Division of Taxation, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations necessary to govern the proper conduct and operation of the program consistent with the provisions of P.L.1996, c.25 (C.34:1B-112 et seq.) including, but not limited to, a procedure for recapturing relocation grants of tax credits awarded pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.) in those cases in which the [commissioner] authority determines that the business receiving the grant of tax credits fails to meet or comply with any condition or requirement attached by the [commissioner] authority to the receipt of the grant of tax credits or included in rules and regulations adopted by the [commissioner] authority governing the implementation of the program.  The Director of the Division of Taxation, after consultation with the authority, is authorized to promulgate such rules and regulations as may be necessary to effect the tax-related provisions of the program.

(cf: P.L.2004, c.65, s.12)

 

     11.  Section 9 of P.L.1996, c.25 (C.34:1B-120) is amended to read as follows:

     9.    a. As determined by the authority, a business which is awarded a grant of tax credits under P.L.1996, c.25 (C.34:1B-112 et seq.) shall submit annually, no later than March 1st of each year, commencing in the year in which the grant of tax credits is issued and for the remainder of the tax credit term, a certification of compliance that indicates that the business continues to maintain the number of retained full-time jobs as specified in the project agreement.  Upon receipt and review thereof, the authority shall issue a certificate of compliance indicating the amount of tax credits that the business may apply against liability in that tax period.  Any reduction in the number of retained full-time jobs below the number prescribed under the terms of the project agreement shall proportionately reduce the amount of tax credits the business may apply against liability in that tax period and the unused credits for that tax period shall be forfeited. If, in any tax period, the number of retained full-time jobs drops below the minimum number of retained full-time jobs indicated in the applicable paragraph of subsection b. of section 7 of P.L.2004, c.65 (C.34:1B-115.3) such that the business would no longer be eligible to apply the credits for the number of years for which it was approved, then the business shall forfeit its credit amount for that tax period and each subsequent tax period, until the first tax period for which documentation demonstrating the restoration of the number of retained full-time jobs has been reviewed and approved by the authority, for which tax period and each subsequent tax period the full amount of the credit shall be allowed.

     b.    As determined by the [commissioner] authority, a business which is awarded a grant of tax credits under P.L.1996, c.25 (C.34:1B-112 et seq.) shall submit annually, no later than March 1st of each year, commencing the year following the calendar year in which the business was approved for the grant of tax credits and for the remainder of the commitment duration, a copy of the State tax return for the business showing business income or activity, appropriate to its form of ownership together with an annual report listing the full-time employees in eligible positions employed at the location or locations approved for the grant of tax credits, to the [commissioner] authority. Failure to submit a copy of its annual report or submission of the annual report without the information required above, may result in the forfeiture of any grant of tax credits to be received by the business and the recapture of any tax credits issued to the business unless the [commissioner] authority determines that there are extenuating circumstances excusing the business from the timely filing required.

(cf: P.L.2004, c.65, s.13)

 

     12.  Section 14 of P.L.2004, c.65 (C.34:1B-120.1) is amended to read as follows:

     14.  The [commissioner] authority is authorized to pursue, and shall adopt rules for, the recapture of all, or a portion of, the grant of tax credits, based on criteria established by the [commissioner] authority pursuant to regulation or under the terms of the project agreement [if the business fails to maintain the retained full-time jobs at the location or locations approved for the grant of tax credits for the commitment duration or fails to meet or comply with any condition or requirement under the terms of the project agreement or included in rules and regulations adopted by the commissioner governing the implementation of the program].  The rules shall allow for the [commissioner] authority to pursue the full or partial recapture or, in its discretion, to notify the Director of the Division of Taxation in the Department of the Treasury, who shall issue a recapture assessment which shall be based upon the proportionate value of the grant of tax credits that corresponds to the amount and period of noncompliance[.  The] , in which case, the recapture of funds shall be subject to the State Uniform Tax Procedure Law, R.S.54:48-1 et seq.  Recaptured funds shall be deposited in the General Fund of the State.

(cf: P.L.2004, c.65, s.14)

 

     13.  Section 17 of P.L.2004, c.65 (C.34:1B-120.2) is amended to read as follows:

     17.  a. The [commissioner] authority shall establish a corporation business tax credit and insurance premiums tax credit certificate transfer program to allow businesses in this State with unused amounts of tax credits issued under P.L.1996, c.25 (C.34:1B-112 et seq.), and otherwise allowable, that cannot be applied by the business to which originally issued before the expiration of the credit, to surrender those tax credits for use by other corporation business and insurance premiums taxpayers in this State [, provided that the taxpayer receiving the surrendered tax credits is not affiliated with the business that is surrendering its tax credits. For the purposes of this section, the test of affiliation is whether the same entity directly or indirectly owns or controls 5% or more of the voting rights or 5% or more of the value of all classes of stock of both the taxpayer receiving the tax credits and the business that is surrendering the tax credits]. The tax credits may be used on the corporation business tax and insurance premiums tax returns to be filed by those taxpayers in exchange for private financial assistance to be provided by the corporation business taxpayer or insurance premiums taxpayer that is the recipient of the corporation business tax credit certificate or insurance premiums tax credit certificate to assist in the funding of costs incurred by the relocating business.

     b.    [The commissioner, in cooperation with the Director of the Division of Taxation in the Department of the Treasury, shall review and approve applications by taxpayers under the Corporation Business Tax Act (1945), P.L.1945, c.162 (C.54:10A-1 et seq.) and by taxpayers under the taxes imposed on insurers pursuant to P.L.1945, c.132 (C.54:18A-1 et seq.), section 1 of P.L.1950, c.231 (C.17:32-15) and N.J.S.17B:23-5 to acquire surrendered tax benefits, which shall be issued in the form of corporation business tax credit and insurance premiums tax credit transfer certificates,] Businesses may apply to the authority and the Director of the Division of Taxation for a tax credit transfer certificate, covering one or more years.  Upon receipt thereof, the business may sell or assign the tax credit certificate in exchange for private financial assistance to be made by the [taxpayer] purchaser  in an amount equal to at least 75% of the amount of the surrendered tax credit of a business relocating in the State. The private financial assistance shall assist in funding expenses incurred in connection with the operation of the business in the State, including but not limited to the expenses of fixed assets, such as the construction and acquisition and development of real estate, materials, start-up, tenant fit-out, working capital, salaries, research and development expenditures and any other expenses determined by the [commissioner] authority to be necessary to carry out the purposes of P.L.1996, c.25 (C.34:1B-112 et seq.).

     c.     The [commissioner] authority shall [coordinate] establish procedures to facilitate such transfers and encourage liquidity and simplicity in the market for the purchase and sale of such certificates, including, in the authority's discretion, coordinating the applications for surrender and acquisition of unused but otherwise allowable tax credits pursuant to this section in a manner that can best stimulate and encourage the extension of private financial assistance to businesses in this State.  The authority also shall have the discretion, in consultation with the State Treasurer, to purchase and retire unused certificates under circumstances where it may determine that such purchase and retirement is in the furtherance of the purposes of this act and in the overall interest of the State in cost-effective promotion of economic development.

     d.    The [commissioner] authority shall, in consultation with the Director of the Division of Taxation, develop criteria for the approval or disapproval of applications.

(cf: P.L.2004, c.65, s.17)

 

     14.  Section 10 of P.L.1996, c.25 (C.34:1B-121) is amended to read as follows:

     10.  The [commissioner] authority shall prepare and transmit to the Governor and the Legislature on or before November 1st of each year, a report concerning the impact of the program on job retention in the State.

(cf: P.L.2004, c.65, s.15)

 

     15.  Section 12 of P.L.1996, c.25 (C.34:1B-123) is amended to read as follows:

     12.  There is appropriated to the [New Jersey Commerce and Economic Growth Commission] authority from the General Fund such sums as may be necessary, as certified by the [commissioner] chief executive officer of the authority and the Director of the Division of Budget and Accounting, to fund business retention and relocation grants of tax credits made under P.L.1996, c.25 (C.34:1B-112 et seq.), the amount of which shall not exceed the retained State tax revenues as defined in section 2 of P.L.1996, c.25 (C.34:1B-113).

(cf: P.L.2004, c.65, s.16)

 

     16.  Section 11 of P.L.1996, c.25 (C.34:1B-122) is repealed.

 

     17.  This act shall take effect immediately and apply to tax periods beginning on or after the date of enactment.

 

 

STATEMENT

 

     This bill broadens the availability and revises the terms of financial assistance under New Jersey's Business Retention and Relocation Assistance Grant ("BRRAG") Program.  This program, administered by the New Jersey Economic Development Authority ("NJEDA"), helps a business preserve jobs, expand operations, and reinvest in the State through the award of tax credits against the corporation business tax and various taxes on insurers; the amount of the credits awarded is based upon the business's investment, or its expansion or preservation of jobs, in the State.

     Under the bill:

     (1)   A current provision, limiting the amount of an individual grant of tax credits to no more than 80 percent of projected State tax revenues from the retained full-time jobs, is eliminated.

     (2)   Applicants for BRRAG credits would have to show that the capital investment and jobs retention resulting from their proposed projects would "yield a net positive benefit to the State."

     (3)   Not only jobs relocated within the State (as currently), but also jobs maintained at a New Jersey business location, could qualify as "retained" jobs for BRRAG award eligibility purposes.

     (4)   "Bonus" credits under the program, currently awarded for the relocation of jobs to urban centers, could also be earned for making a capital investment in an amount that is at least twice that of the value of the credits granted.

     (5)   The current annual cap of $20 million on the issuance of BRRAG credits is converted to a cap on the total amount of such credits that could applied against tax liability in a fiscal year.  Also, a new annual cap of $10 million would be imposed on the total value of credits that a single business could apply against liability in a fiscal year.

     (6)   The value of BRRAG credits for a business retaining more than 250 jobs is increased by authorizing awards in multiples of up to six times the current rate of $1,500 per employee, with the size of the multiple depending on the number of retained jobs.  The bill requires such "multiple rate" awards to be taken in equal amounts over the appropriate number of years.

     (7)   A current rule, establishing as a precondition for the issuance of BRRAG credits to a business that the amount of State tax revenue resulting from retention of the business must at least equal the value of the credits, is instead made a precondition for the business's ability to apply the credits against tax liability.

     (8)   The class of businesses to which, as a "designated industry," consideration may be given in determining the amount of a BRRAG award is broadened to include, not only high technology businesses, but any business deemed desirable by the NJEDA to be maintained in the State.

     (9)   Once a business is initially granted BRRAG credits, and for so long as it participates in the program, it would have to certify to the NJEDA that it continues to maintain the number of retained jobs specified in the agreement under which the credits were issued.  Based upon this certification, the NJEDA would issue a certificate indicating the amount of credits that the business could use in a tax period.  If a business failed to meet its jobs retention commitment, its credit award would be reduced proportionately and it would forfeit the unused credits.

     (10) A provision in the statute authorizing the sale of BRRAG tax credits that prohibits such sales between "affiliated" businesses is eliminated.

     (11) A requirement that a study be conducted to determine the minimum funding level needed for successful implementation of the BRRAG program is repealed.

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