Applying for NJ’s Brownfield Redevelopment Incentive

The New Jersey Economic Development Authority (NJEDA) is currently accepting applications for the Brownfield Redevelopment Incentive…

The New Jersey Economic Development Authority (NJEDA) is currently accepting applications for the Brownfield Redevelopment Incentive. The deadline to apply for the first round of funding is Thursday, September 21, 2023 at 5PM.

The new tax credit program, which was established under the New Jersey Economic Recovery Act of 2020, provides incentives on all phases of brownfields redevelopment, including from investigation through remediation. It can also be stacked with other tax credits, including the Aspire Program and the Historic Property Reinvestment Program.

Eligibility Criteria

To receive tax credits through the Brownfields Redevelopment Incentive Program, the project must be a brownfield site, which means any former or current commercial or industrial site that is currently vacant or underutilized and on which there has been, or there is suspected to have been, a discharge of a contaminant or on which there is contaminated building material.

A developer must also demonstrate, to the satisfaction of the NJDEP, that it did not discharge a hazardous substance at the brownfield site, is not in any way responsible for the hazardous substance, and is not a corporate successor to the discharger or to any person in any way responsible for the hazardous substance or to anyone liable for cleanup and removal costs pursuant to the Spill Compensation and Control Act.

Projects must also meet the following eligibility requirements:

• Receive a letter of support from the governing body of the municipality(ies) where the brownfield site is located.
• Demonstrate the project is not economically feasible without the tax credit award. Financial information on the redevelopment project, must include, but is not limited to, any Federal, State, or local financial assistance for the project, proposed terms of financing, purchase contract agreement for the brownfield site, projected reasonable and appropriate return on investment, and any other documentation needed to demonstrate status of economic feasibility.
• Prove that a project financing gap exists, and the tax credit being considered for the project is equal or less than the project financing gap. “Project financing gap” means the part of the total cost of remediation, including reasonable and appropriate return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to, developer contributed capital, which can’t be less than 20 percent of the total cost of remediation, and investor or financial entity capital or loans for which the developer, after making all good faith efforts to raise additional capital, certifies that additional capital cannot be raised from other sources.
• Meet prevailing wage requirements for all remediation and construction work for the redevelopment project and subsequent redevelopment project, if applicable, including 10 years for building services.
• Not have started remediation activities by the developer/affiliates (other than environmental assessment and investigation activities) unless the applicant certifies that they could not have reasonably known the full extent of contamination prior to starting the cleanup. Prior environmental assessment and investigation up to 24 months prior to application may be eligible for inclusion in the program.
• Demonstrate that remediation costs are reasonable and appropriate. DEP will review the proposed costs to determine if the costs are eligible for the program and complete a cost reasonableness determination prior to EDA board approval.
• Be in good standing with NJ Department of Environmental Protection, NJ Department of Labor and Workforce Development, and NJ Department of the Treasury.
• Have a developer equity contribution of 20% of total cost of remediation (10% in Government Restricted Municipalities and Qualified Incentive Tracts).
• Have site access to perform the remediation.
• Meet Green Remediation/Green Building Standards.

Cannabis Businesses are not eligible for the Brownfields Redevelopment Incentive Program. Additionally, projects that received a reimbursement through the Former Brownfield Contaminated Site Reimbursement Program are also not eligible.

Tax Credit Awards

For the Brownfields Redevelopment Incentive Program, tax credit awards are calculated based on a percentage of the cost of remediation, with the percentage determined by the location of the project. Fifty percent of costs will be covered on typical sites up to a maximum of $4 million. Enhanced benefits of 60 percent of remediation costs up to a cap of $8 million are available for sites located in Government Restricted Municipalities (e.g., Atlantic City, Paterson, and Trenton) and Qualified Incentive Tracts. Tax credits are transferable and can be redeemed for 75 to 85 percent of their value.

Only remediation costs are eligible for the tax credits for the Brownfields Redevelopment Incentive Program. Eligible remediation costs include: soil and groundwater investigation and remediation, site remediation, hazardous materials assessment and survey, hazardous materials or waste disposal, building and structural remediation issues such as demolition, asbestos abatement, PCB removal, and contaminated wood or paint removal, and other infrastructure remedial activities as approved by NJEDA. The following uses are not eligible: cost of acquisition of the site at which the redevelopment project will be conducted, any costs incurred in financing the remediation, legal fees, incentive consultant fees, payments for penalties or violations, and NJEDA fees.

Application Process

The NJEDA, in consultation with the NJDEP, will review the applications through a competitive application process. In addition to the eligibility criteria set forth above, the agencies may consider additional factors that may include, but are not limited to: the economic feasibility of the redevelopment project; the benefit of the redevelopment project to the community in which the remediation project is located; the degree to which the redevelopment project enhances and promotes job creation and economic development and reduces environmental or public health stressors in an overburdened community; and, if the developer has a board of directors, the extent to which that board of directors is diverse and representative of the community in which the redevelopment project is located. 

Application fees are $2,000 for projects with total cost of remediation of $5 Million or less and $7,000 for projects with total cost of remediation greater than $5 Million. The application is now available at www.njeda.gov/brownfield-redevelopment- incentive.

How We Can Help

The deadline to apply for theBrownfield Redevelopment Incentive is quickly approaching. Because the tax credits are awarded through a competitive application process, it is imperative to work with experienced counsel.

Scarinci Hollenbeck’s Environmental Law Group has been an integral participant in the redevelopment of many brownfield, commercial, and industrial properties throughout New Jersey. We encourage prospective applicants of the Brownfield Redevelopment Incentive Program to contact our attorneys for assistance. We can help you determine if your project qualifies for the program and, if so, help position it for success.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, William C. Sullivan, Jr., at 201-896-4100.