On May 7, 2007, Acting Governor Richard Codey signed into law Bill S2095 (the “Bill”) effecting an amendment to the Neighborhood Revitalization State Tax Credit Act (the “Act”).
The purpose of the Act is to encourage private sector partnership with non-profits to revitalize neighborhoods in those municipalities that are eligible to receive Special Municipal Aid or are Abbott Districts. Businesses that financially assist neighborhood revitalization programs receive a tax credit against taxes on certain business income. The tax credit was previously for 50% of the assistance provided; effective immediately, this will be raised to 100%. The Bill also raises the total annual amount of tax credit allowed to a business from $500,000 to up to $1 million.
A not-for-profit entity seeking private investment must prepare a neighborhood preservation and revitalization plan and submit the plan to the Department of Community Affairs (DCA) for approval. N.J.S.A. 52:27D-493. The plan shall be approved if it meets the standards set forth at N.J.S.A. 52:27D-494, which include notice to the municipality and other nonprofit organizations, and consistency with the MLUL, and any redevelopment plans or neighborhood empowerment plans. The plan must also set forth an overall concept of the future of the neighborhood, including strategies and activities to foster preservation and revitalization. Upon approval of the plan, the non-profit can then prepare a specific project for DCA approval, which will include implementation strategies and demonstrate how the project will specifically use the tax credit investments. N.J.S.A. 52:27D-495. Each approved project can qualify for up to $1 million in tax credit investments. N.J.S.A. 52:27D-496.b(4). Businesses pay their money into the DCA and can fund specific projects or the DCA can act as a clearinghouse and apply unapplied monies to unfunded projects. N.J.S.A. 52:27D-496, -498
The DCA issues a tax credit certificate to the business providing support for a qualified project. Pursuant to N.J.S.A. 52:27D-492, the credit may be applied against state tax imposed on business related income, other than tax imposed under the New Jersey Gross Income Tax, including, but not limited to: business income subject to the provisions of the Corporation Business Tax Act (1945), N.J.S.A 54:10A-1 et seq., "The Savings Institution Tax Act," N.J.S.A 54:10D-1 et seq., the tax imposed on marine insurance companies pursuant to N.J.S.A.54:16-1 et seq., the tax imposed on insurers generally, pursuant to N.J.S.A 54:18A-1 et seq. the sewer and water utility excise tax imposed pursuant to N.J.S.A 54:30A-54, and the petroleum products gross receipts tax imposed pursuant to N.J.S.A 54:15B-3.
The Assembly Appropriations Committee noted in its report on the bill that no tax credit was granted for calendar years 2003 and 2004, the most recent years for which data are available. Hopefully, the added incentives of the Act will encourage greater private sector participation in New Jersey’s urban revitalization.