A Closer Look at Business Opportunities in New Jersey’s Urban Centers
On July 30th, 2011 James Christopher Christie, New Jersey’s ebullient Governor, signed the Urban Transit Hub Tax Credit Act into existence. The Act increases a credit first passed in “The Economic Stimulus Act of 2009” on real estate projects costing $50 million or more.
The new law (S-2972/A-4161), however, will extend eligibility for these credits to mixed-use projects comprising both a business facility and a residential development, even if neither by itself satisfies the total investment minimum of $50 million. The eligibility for tax credits applies as long as the investment in either the residential or commercial component of the project amounts to at least $17.5 million, with the total amount invested in the project as a whole being at least $50 million
The revised law, sponsored by state Sen. Raymond Lesniak (D-Union) and Assemblyman Albert Coutinho (D-Essex), also widens the available credit from 20 percent to 35 percent of capital costs for residential builders.
The credit must be taken over ten years (the “eligibility period”), at a rate of 1/10
of the total credit beginning with the tax period in which the business is first
approved as having met the investment capital and employment qualification.
As previously, the Act helps companies and developers to save, on building projects in Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson and Trenton.
The list of municipalities that qualify is not likely to change in the future without further legislation, because they qualify only if 30% or more of the value of the real property was exempt from local property taxation during the year 2006.
Projects that are within a mile of transit centers qualify. Also property which is partially included within the radius can only be considered part of the hub if more 50% of the land area falls within the one mile radius. (The previous version of the law which passed in 2009, specified a half mile radius).
“Transit Oriented Development” programs such us the current Act are intended to increase pedestrian and transit trip taking while reducing the number and length of auto trips. In theory, TOD will help lower greenhouse gas emissions and make development more “livable,” which is an element that some believe is lacking from modern suburban development planning.
Housing planners and advocates do have their grouses however. Developers were once required to build 20 percent of residential units for affordable housing. Now that decision rests with city leaders. (In Feb 2011, Christie had conditionally vetoed a previous rendition of this Act on the grounds that it required too much in the way of affordable housing).
"My tax dollars are going to subsidize high-rise luxury condos in Hoboken," said Adam Gordon , a staff attorney with the Fair Share Housing Center, in article published by the Star Ledger "When you're spending hundreds of millions of tax dollars, the question is what is the public benefit?"
This legislation has been touted as an example of bi-partisan collaboration even though Governor Christie vetoed a previous rendition of the bill in February 2011 to void affording housing requirements that were previously mandated.
There are as always good and not so good aspects when it comes to legislation. While this Act will bring opportunity to these nine New Jersey cities, it could also crowd out local residents from opportunity. The fact that all these opportunities are located within a mile of a transit hub makes it possible for better qualified suburban employees to land jobs in our cities. Urban planners and progressive legislators would do well to watch this phenomenon.
"These incentives are a critical piece of a broader effort to drive New Jersey's economic recovery in urban centers of priority"
Governor Chris Christie, speaking about the Urban Transit Hub Tax Credit Act
"My tax dollars are going to subsidize high-rise luxury condos in Hoboken"
Adam Gorden, Staff Attorney with the Fair Share Housing Center