Bill Text: NJ S2510 | 2012-2013 | Regular Session | Introduced
Bill Title: Establishes Job Opportunity Benefit Program to provide tax credits to certain businesses having large number of employees in the State.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2013-01-28 - Introduced in the Senate, Referred to Senate Economic Growth Committee [S2510 Detail]
Download: New_Jersey-2012-S2510-Introduced.html
Sponsored by:
Senator RAYMOND J. LESNIAK
District 20 (Union)
Senator DONALD NORCROSS
District 5 (Camden and Gloucester)
Co-Sponsored by:
Senator Cunningham
SYNOPSIS
Establishes Job Opportunity Benefit Program to provide tax credits to certain businesses having large number of employees in the State.
CURRENT VERSION OF TEXT
As introduced.
An Act providing for the availability of tax credits to certain businesses and supplementing Title 34 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Sections 1 through 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the "Job Opportunity Benefit Act."
2. As used in P.L. , c. (C. ) (pending before the Legislature as this bill):
"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). A taxpayer 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. An affiliate of a business may contribute to meeting either the qualified investment or full-time employee requirements of a business that applies for a credit under section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Authority" means the New Jersey Economic Development Authority established by section 4 of P.L.1974, c.80 (C.34:1B-4).
"Business" means a corporation that is subject to the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), a corporation that is subject to the tax imposed pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), section 1 of P.L.1950, c.231 (C.17:32-15) or N.J.S.17B:23-5. A business shall include an affiliate of the business if that business applies for a credit based upon any capital investment made by or based upon retained full-time jobs of an affiliate.
"Capital investment" in a qualified business facility means expenses incurred after application, but before the end of the tenth year, after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) for: a. 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.
"Eligible position" means a full-time position retained or created 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 chapter 27 of Title 17B of the New Jersey Statutes.
"Full-time employee" means a person 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 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 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 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.
"New full-time job" means an eligible position created by the business at the qualified business facility that did not previously exist in this State. For the purposes of determining a number of new full-time jobs, the eligible positions of an affiliate shall be considered eligible positions of the business.
"Program" means the "Job Opportunity Benefit Program" established pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Qualified business facility" means any building, complex of buildings, or structural components of buildings, and all machinery and equipment located within a qualified incentive area, used in connection with the operation of a business.
"Qualified incentive area" means an area designated pursuant to P.L.1985, c.398 (C.52:18A-196 et seq.) as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or any urban, regional, or town designated center under the State Development and Redevelopment Plan; an area zoned for development pursuant to a master plan adopted by the New Jersey Meadowlands Commission pursuant to subsection (i) of section 6 of P.L.1968, c.404 (C.13:17-6) or subject to a redevelopment plan adopted by the New Jersey Meadowlands Commission pursuant to section 20 of P.L.1968, c.404 (C.13:17-21); any land owned by the New Jersey Sports and Exposition Authority, established pursuant to P.L.1971, c.137 (C.5:10-1 et seq.), within the boundaries of the Hackensack Meadowlands District as delineated in section 4 of P.L.1968, c.404 (C.13:17-4); a pinelands regional growth area, a pinelands town management area, a pinelands village, or a military and federal installation area established pursuant to the pinelands comprehensive management plan adopted pursuant to P.L.1979, c.111 (C.13:18A-1 et seq.); an area designated for development, redevelopment, or economic growth within the Highlands Region; a transit village, as determined by the Commissioner of Transportation; federally owned land approved for closure under any federal Base Closure and Realignment Commission action; or any property consisting of a vacant commercial building having over 400,000 square feet of office, laboratory, or industrial space available for occupancy for a period of over one year or is negatively impacted by the approval of a "qualified business facility," as defined pursuant to section 2 of P.L.2007, c.346 (C.34:1B-208).
"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 an affiliate shall be considered eligible positions of the business.
3. a. The Job Opportunity Benefit Program is hereby established as a program under the jurisdiction of the New Jersey Economic Development Authority and shall be administered by the 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 outside of the State. To implement this purpose, and to the extent that funding for the program is available, the program may provide tax credits to an eligible business. To be eligible for any tax credits pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), a business's chief executive officer or equivalent officer shall demonstrate to the authority, at the time of application, that: (1) the business will make, acquire, or lease a capital investment of at least $25,000,000 at a qualified business facility at which it will employ at least 500 full-time employees in new or retained full-time jobs; (2) the capital investment resultant from the award of tax credits and the resultant retention and creation of eligible positions will yield a net positive benefit to the State; and, except as provided in subsection d. of this section, (3) the award of tax credits will be a material factor in the business's decision to create or retain the minimum number of full-time jobs for eligibility under the program.
b. To assist the authority in determining whether a proposed capital investment will yield a net positive benefit, the business's chief executive officer, or equivalent officer, shall submit a certification to the authority indicating that any existing jobs are at risk of leaving the State, that any projected creation of new full-time jobs would not occur but for the provision of tax credits under the program, and that the business's chief executive officer, or equivalent officer, has reviewed the information submitted to the authority and that the representations contained therein are accurate. In the event that this certification by the business's chief executive officer, or equivalent officer, is found to be willfully false, the authority may revoke any award of tax credits in their entirety, which revocation shall be in addition to any other criminal or civil penalties that the business and the officer may be subject to. When considering an application involving intra-State job transfers, the authority shall require the business to submit the following information as part of its application: a full economic analysis of all locations under consideration by the business; all lease agreements, ownership documents, or substantially similar documentation for the business's current in-State locations; and all lease agreements, ownership documents, or substantially similar documentation for the potential out-of-State location alternatives, to the extent they exist. Based on this information, and any other information deemed relevant by the authority, the authority shall independently verify and confirm, by way of making a factual finding by separate vote of the authority's board, the business's assertion that the jobs are actually at risk of leaving the State, before a business may be awarded any tax credits under this section.
c. 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.
d. The authority may determine as eligible for tax credits under the program any business that is required to respond to a request for proposals and to fulfill a contract with the federal government although the business's chief executive officer or equivalent officer has not demonstrated to the authority that the award of tax credits will be a material factor in the business's decision to create new or retain at least 500 full-time jobs, as otherwise required by paragraph (3) of subsection a. of this section. The authority may, in its discretion, consider the economic benefit of the retained jobs servicing the contract in conducting a net benefit analysis required by paragraph (2) of subsection a. of this section. For the purposes of this subsection, "retained jobs" includes jobs that are at risk of being eliminated. Applications to the authority for eligibility under the program pursuant to the criteria set forth in this subsection shall be completed by July 1, 2016. Submission of a proposal to the federal government prior to authority approval shall not disqualify a business from the program.
4. The authority shall require an eligible business to enter an agreement prior to the issuance of tax credits. The agreement shall include, but shall not be limited to, the following:
a. A detailed description of the proposed project which will result in job creation or retention, and the number of full-time employees.
b. The term of the tax credits, and the first year for which the tax credits may be claimed.
c. Personnel information that will enable the authority to administer the program.
d. A requirement that the applicant maintain the project at a location in New Jersey for at least 15 years in order to be eligible to receive the tax credits, with at least the number of full-time employees as required by section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), and a provision to permit the authority to recapture all or part of any tax credit awarded, at its discretion, if the business does not remain at the site for at least 15 years.
e. A method for the business to report annually to the authority the number of full-time employees for which the tax credits are to be made.
f. A provision permitting an audit of the payroll records of the business from time to time, as the authority deems necessary.
g. A provision which permits the authority to amend the agreement.
h. A provision establishing the conditions under which the agreement may be terminated and awarded tax credits are recaptured, in whole or in part, by the authority at its discretion.
i. A requirement that not less than the prevailing wage rate, as determined by the Commissioner of Labor and Workforce Development pursuant to the provisions of P.L.1963, c.150 (C.34:11-56.25 et seq.), be paid to workers employed in the performance of any construction contract, undertaken in connection with authority financial assistance, at the qualified business facility of the applicant, or undertaken to fulfill any condition of receiving authority financial assistance, including the performance of any contract to construct, renovate, or otherwise prepare a qualified business facility which are necessary for the receipt of authority financial assistance.
j. A requirement that any construction project for a qualified business facility shall contain a project labor agreement. The project labor agreement shall be subject to the provisions of P.L.2002, c.44 (C.52:38-1 et seq.), and shall be implemented in a manner that, to the greatest extent possible, enhances employment opportunities for individuals residing in the county of the project's location. The general contractor, construction manager, design-build team, or subcontractor for a construction project proposed in accordance with this subsection shall be registered pursuant to the provisions of P.L.1999, c.238 (C.34:11-56.48 et seq.), and shall be classified by the Division of Property Management and Construction to perform work on a construction project for a qualified business facility.
5. The value of each tax credit for an eligible business shall be equal to $8,000 per year over a period of up to 10 years for each new or retained full-time job determined by the authority pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill) to be located at the qualified business facility, subject to the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
6. a. (1) The value of all credits approved by the authority pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) shall not exceed $1,000,000,000. The value of an award of all credits to a single eligible business shall not exceed $200,000,000.
(2) A business, including any affiliate of the business or any business that is a tenant within any qualified business facility, shall make or acquire capital investments totaling not less than $25,000,000 in a qualified business facility, at which the business shall employ not fewer than 500 full-time employees to be eligible for a credit pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). A business that acquires or leases a qualified business facility shall also be deemed to have acquired the capital investment made or acquired by the seller or landlord, as the case may be.
(3) A business shall not be allowed tax credits pursuant to P.L.1996, c.25 (C.34:1B-112 et seq.), P.L.1996, c.26 (C.34:1B-124 et seq.), or P.L.2011, c.149 (C.34:1B-242 et al.) relating to the same capital and employees that qualify the business for tax credits pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill). A business that is allowed a tax credit under this section shall not be eligible for incentives authorized pursuant to P.L.2002, c.43 (C.52:27BBB-1 et al.). A business shall not qualify for a tax credit under this section, based upon capital investment and employment of full-time employees, if that capital investment or employment was the basis for which a grant was provided to the business pursuant to the "Urban Transit Hub Tax Credit Act," P.L.2007, c.346 (C.34:1B-207 et seq.).
(4) Full-time employment for an accounting or privilege period shall be determined as the average of the monthly full-time employment for the period.
(5) The capital investment of the owner of a qualified business facility is that percentage of the capital investment made or acquired by the owner of the building that the percentage of net leasable area of the qualified business facility not leased to tenants is of the total net leasable area of the qualified business facility. For a business that is a tenant, the amount of capital investment in a facility that a leased area represents shall be equal to that percentage of the owner's total capital investment in the facility that the percentage of net leasable area leased by the tenant is of the total net leasable area of the qualified business facility. Capital investments made by a tenant shall be deemed to be included in the calculation of the capital investment made or acquired by the owner, but only to the extent necessary to meet the owner's minimum capital investment of $25,000,000. Capital investments made by a tenant and not allocated to meet the owner's minimum capital investment threshold of $25,000,000 shall be added to the amount of capital investment represented by the tenant's leased area in the qualified business facility.
b. A business shall apply for the tax credit prior to July 1, 2016, and shall submit its documentation indicating that it has met the capital investment and employment criteria specified in the project agreement for certification of its credit amount no later than July 28, 2019.
c. (1) The authority shall require the business to certify to the authority that the business has met the necessary investment capital and employment qualifications, subject to any reduction or disqualification as provided by subsection d. of this section, as determined by annual review by the authority. In conducting its annual review, the authority may require a business to submit any information determined by the authority to be necessary and relevant to its review.
The credit amount for any tax period ending after July 28, 2019, during which the documentation of a business's credit amount remains uncertified shall be forfeited, although credit amounts for the remainder of the years of the 10-year credit period shall remain available to the business.
The credit amount that may be taken for a tax period of the business that exceeds the final liabilities of the business for the tax period may be carried forward for use by the business in the next 20 successive tax periods, and shall expire thereafter, provided that the value of all credits approved by the authority against tax liabilities pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill), in any fiscal year shall not exceed $100,000,000.
(2) A business that is a partnership shall not be allowed a credit under this section directly, but the amount of credit of an owner of a business shall be determined by allocating to each owner of the partnership that proportion of the credit of the business that is equal to the owner of the partnership's share, whether or not distributed, of the total distributive income or gain of the partnership for its tax period ending within or with the owner's tax period, or that proportion that is allocated by an agreement, if any, among the owners of the partnership that has been provided to the Director of the Division of Taxation in the Department of the Treasury by such time and accompanied by such additional information as the director may require.
(3) The amount of credit allowed may be applied against the tax liability otherwise due pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), pursuant to section 1 of P.L.1950, c.231 (C.17:32-15), or pursuant to N.J.S.17B:23-5.
d. (1) If, in any tax period, the business reduces the total number of full-time employees in its Statewide workforce by more than 30 percent from the number of full-time employees in its Statewide workforce in the last tax period prior to the credit amount approval under section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), 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 business's Statewide workforce to the threshold levels required by this paragraph 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.
(2) If, in any tax period, the number of full-time employees employed by the business at the qualified business facility located within a qualified incentive area drops below 90 percent of the number of new and retained full-time jobs specified in the project agreement, 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 full-time employees employed by the business at the qualified business facility to 100 percent of the number of new and retained full-time jobs specified in the project agreement.
(3) (a) If the qualified business facility is sold in whole or in part during the 10-year eligibility period the new owner shall not acquire the capital investment of the seller and the seller shall forfeit all credits for the tax period in which the sale occurs and all subsequent tax periods, provided however that any credits of tenants shall remain unaffected.
(b) If a tenant subleases its tenancy in whole or in part during the 10-year eligibility period, the new tenant shall not acquire the credit of the sublessor, and the sublessor tenant shall forfeit all credits for the tax period of its sublease and all subsequent tax periods.
7. A business may apply to the Director of the Division of Taxation in the Department of the Treasury and the chief executive officer of the authority for a tax credit transfer certificate, covering one or more years, in lieu of the business being allowed any amount of the credit against the tax liability of the business. The tax credit transfer certificate, upon receipt thereof by the business from the director and the chief executive officer of the authority, may be sold or assigned, in full or in part, to any other person that may have a tax liability pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), pursuant to sections 2 and 3 of P.L.1945, c.132 (C.54:18A-2 and 54:18A-3), pursuant to section 1 of P.L.1950, c.231 (C.17:32-15), or pursuant to N.J.S.17B:23-5. The certificate provided to the business shall include a statement waiving the business's right to claim that amount of the credit against the taxes that the business has elected to sell or assign. The sale or assignment of any amount of a tax credit transfer certificate allowed under this section shall not be exchanged for consideration received by the business of less than 75 percent of the transferred credit amount. Any amount of a tax credit transfer certificate used by a purchaser or assignee against a tax liability shall be subject to the same limitations and conditions that apply to the use of the credit by the business that originally applied for and was allowed the credit.
8. a. The chief executive officer of the authority, in consultation with the Director of the Division of Taxation in the Department of the Treasury, shall adopt rules in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) as are necessary to implement P.L. , c. (C. ) (pending before the Legislature as this bill), including but not limited to: examples of and the determination of capital investment; the enumeration of qualified incentive areas; specific delineation of these incentive areas; the determination of the limits, if any, on the expense or type of furnishings that may constitute capital improvements; the promulgation of procedures and forms necessary to apply for a tax credit, including the enumeration of the certification procedures and allocation of tax credits for different phases of a qualified business facility; and provisions for tax credit applicants to be charged an initial application fee, and ongoing service fees, to cover the administrative costs related to the tax credit.
b. Through regulation, the authority shall establish standards by which qualified business facilities shall be constructed or renovated based on the green building manual prepared by the Commissioner of Community Affairs pursuant to section 1 of P.L.2007, c.132 (C.52:27D-130.6), regarding the use of renewable energy, energy-efficient technology, and non-renewable resources in order to reduce environmental degradation and encourage long-term cost reduction.
9. This act shall take effect immediately.
STATEMENT
The bill creates the "Job Opportunity Benefit Program," (program) to be established and administered by the New Jersey Economic Development Authority (authority), under which an eligible business will receive a tax credit for making a minimum $25 million capital investment in a business facility and creating or retaining at least 500 full-time positions in a qualified area. The business is required to apply for the credit before July 1, 2016. Eligibility for program tax credits will also be based upon a determination by the authority that the capital investment will yield a net positive benefit to the State and that the award of tax credits is a material factor in the business decision to create or retain the minimum number of full-time jobs. The authority shall require the business to certify to the authority that the business has met the necessary investment capital and employment qualifications, subject to any reduction or disqualification, as determined by annual review by the authority. In conducting its annual review, the authority may require a business to submit any information determined by the authority to be necessary and relevant to its review. A qualified area is: 1) a vacant commercial building having over 400,000 square feet of office, laboratory, or industrial space available; 2) an area designated for development within the Highlands, Meadowlands, and Pinelands; 3) Fort Monmouth; 4) a transit village; and 5) areas designated as Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), or as an urban, regional, or town center under the State Development and Redevelopment Plan.
The authority shall require an eligible business to enter an agreement prior to the issuance of tax credits. The agreement shall include, but shall not be limited to, the following: 1) a detailed description of the proposed project which will result in job creation or retention, and the number of full-time employees; 2) the term of the tax credits, and the first year for which the tax credits may be claimed; 3) personnel information that will enable the authority to administer the program; 4) a requirement that the applicant maintain the project at a location in New Jersey for at least 15 years in order to be eligible to receive the tax credits, and a provision to permit the authority to recapture all or part of any tax credit awarded, at its discretion, if the business does not remain at the site for 15 years; 5) a method for the business to report annually to the authority the number of full-time employees for which the tax credits are to be made; 6) a provision permitting an audit of the payroll records of the business from time to time, as the authority deems necessary; 7) a provision which permits the authority to amend the agreement; 8) a provision establishing the conditions under which the agreement may be terminated and awarded tax credits are recaptured, in whole or in part, by the authority at its discretion; 9) a requirement that that not less than the prevailing wage rate, as determined by the Commissioner of Labor and Workforce Development, be paid to workers employed in the performance of any construction contract, undertaken in connection with authority financial assistance, at the business facility, or undertaken to fulfill any condition of receiving authority financial assistance; and 10) a requirement that any construction project for a qualified business facility shall contain a project labor agreement.
The tax credit would be equal to $8,000 per year over a period of up to ten years for each full-time position created or retained by the business. A total cap on tax credits that can be applied by any business is set at the certified capital investment, and an annual cap on tax credits that can be applied by any business is set at one-tenth of the certified capital investment. If the business does not have a sufficient tax liability against which to offset the tax credit, the business may carry any unused balance forward for 20 years or sell it to another taxpayer. Tax credit amounts may be reduced or revoked if the business fails to meet its New Jersey full-time employment target as specified in the tax credit agreement. The bill provides that tax credits are subject to a $1 billion cap for all tax credits under the program and that tax credits to a single eligible business shall not exceed $200 million. The bill's program provides for forfeiting the amount of assistance received in the current year and any future year in which a business receiving assistance under the program does not meet a 70 percent Statewide job maintenance requirement and a 90 percent and 15-year business facility job maintenance requirement. Tax credits issued to an eligible business are transferable through elective tax credit transfer certificates.
In requiring that a minimum of $25 million in capital investment be spent at the project site, owners, tenants, and affiliates will be allowed to participate in cost sharing to meet this eligibility requirement. The bill requires the authority to establish standards for the construction and renovation of business facilities based on the green building manual prepared by the Commissioner of Community Affairs. The per-project benefit shall not exceed the capital investment at the project site.
