Commercial and Residential Projects
The redevelopment project must be located in a qualifying economic and redevelopment and grant incentive area (See Program Rules link below).
The developer must not have commenced any construction at the site of a proposed redevelopment project prior to submitting an application, except that if the NJEDA determines that the project would not be completed otherwise, or in the event the project is to be undertaken in phases, a developer may apply for phases for which construction has not yet commenced, subject to N.J.A.C. 19:31-4.6(a)2.
A project financing gap must exist. ERG is an incentive for real estate development projects that have a financing gap, defined as having insufficient revenues to support the project debt service under a standard financing scenario. It can also apply to projects that have a below market development margin or rate of return. The grant is not meant to be a substitute for conventional debt and equity financing, and applicants should generally have their primary debt financing in place before applying. In order for a project to be approved, it needs to undergo a rigorous analysis of the sources and uses of funds, construction costs and projected revenues. All of these metrics are compared to industry standard measures.
All projects must meet Green Building Requirements. For guidance on these program requirements, please click here. For questions regarding these requirements, please contact your NJEDA Business Development Officer.
Any construction contracts associated with the project must use prevailing wage labor rates and meet affirmative action requirements.
The developer must submit satisfactory evidence of actual project costs, as certified by a certified public accountant and evidence of a permanent certificate of occupancy, or such other event evidencing project completion as set forth in the incentive agreement, prior to the first disbursement of funds under the agreement or issuance of the tax credit under the approval letter, as applicable.
All commercial projects are subject to an analysis to verify that the revenues the State will realize from the project will be greater than the incentive being provided and an Internal Rate of Return (IRR) Hurdle Rate model to determine a funding gap. The Net Benefits analysis, developed by the NJEDA, utilizes employment statistics from current Regional Input-Output Modeling System II (RIMS II) data from the US Bureau Economic Analysis.
Pursuant to a net benefit analysis, the overall public assistance provided to the project will result in net benefits to the state.
There are no minimum Total Project Cost requirements under the commercial component of the ERG program.
For any project consisting of newly-constructed residential units, the developer shall be required, pursuant to P.L. 2008, c. 46 (N.J.S.A. 52:27D-329.9) to reserve at least 20% of the residential units constructed for occupancy by low or moderate income households, as those terms are defined in section 4 of P.L. 1985, c. 222 (N.J.S.A. 52:27D-304), with affordability controls as required under the rules of the Council on Affordable Housing, unless the municipality in which the property is located has received substantive certification from the council and such a reservation is not required under the approved affordable housing plan, or the municipality has been given a judgment of repose or a judgment of compliance by the court, and such a reservation is not required under the approved affordable housing plan.