1. Responding to the need to stimulate growth and to improve the State’s ability to compete, the NJ Legislature just passed sweeping incentives enhancements. Among the eight bills enacted, two of the most important were a turbo-charged BRRAG tax credit for job retention, and a new Closing Fund to capture catalytic new projects. This alert is one of a series of reports that probe deeper on these recent incentives issues. Our goal is to provide practical information on the highest priority developments throughout the greater NY metro area that could impact the pursuit of economic development incentives… for your company or your clients. Here is a summary of the key changes proposed for both BRRAG and of the new proposed Closing Fund. BRRAG: Increasing maximum potential job retention tax credits from $1,500 to up to $13,500 per job  Jobs must be certified by the CEO as being “at risk” of leaving NJ.  Businesses that remain at existing location or relocate within State are eligible.  Tax credit amount increases with the number of “at risk” jobs.  Job retention commitment periods also scale with the value of tax credit, up to maximum of 11 years.  The forecasted “net benefits” of retained jobs must outweigh value of tax credits.  Tax credit can increase to $2,250 per job for projects with capital investment of 2x the value of tax credits.  Increased flexibility for transferability for credits. Note: BLS was privileged to have served as incentives advisor to Honeywell on this matter, and drafted the initial legislation. CLOSING FUND: The Closing Fund is a “war chest” for discretionary grants needed to “close” hotly competitive projects, joining many other states, including PA, FL, SC and NC – all of which have been regularly poaching jobs in NJ. Key features of the legislation are:  Total potential funding capped at $50 million annually.  Can be used for retention, expansion and new projects in designated industries.  The project must demonstrate that such funding is a “material factor” in choosing NJ.  Amount of award depends on number of factors including the size the project and its location.  Grant recipients must make a five year job retention commitment.  The amount of the award is not to exceed $1 for every $4 of private capital investment, and the “Net Benefits” test must be satisfied within 5 years.  The project also must be found to stimulate broader economic activity. Last week the Legislature also enacted a Single Sales Factor for Corp Income Tax, and incentives for venture investment and small businesses. It also is readying refinements to the ERGG program and the Urban Transit Hub Tax Credit. Thus far, the Governor has announced support for only one of these bills – the expanded BRRAG tax credits. Given budget pressures, he may veto others. Stay tuned. We will update you as things progress. ABOUT BLS & COABOUT BLS & CO. For more than 25 years, Biggins Lacy Shapiro & Company has provided professional expertise and creativity in the field of Location Economics: the mix of specialized disciplines that enables companies and communities to plan and execute successful location strategies. We create value on both the demand and supply side of the market for corporate location decisions. NEW JERSEY LEGISLATURE ENACTS NEW INCENTIVES PACKAGE TO STIMULATE JOBS AND INVESTMENT (PART 1) NEW YORK 215 Park Avenue South, 10th Floor New York, NY 10003 (646) 652-7555 PRINCETON 47 Hulfish Street, Suite 400 Princeton, NJ 08542 (609) 924-9775 JAY BIGGINS | Executive Managing Director JOE LACY | Managing Director ANDY SHAPIRO | Managing Director WWW.BLS STRATEGIES. COM A BOUT BLS A BOUT BLS O UR S ERVICES N EWS K NOWLEDGE C ENTERO UR S ERVICES N EWSK NOWLEDGE C ENTER