FOOD DESERT RELIEF SUPERMARKET TAX CREDIT
The Food Desert Relief Supermarket Tax Credit Program is currently accepting applications. Please click on the APPLY HERE button on the right to apply.
The Food Desert Relief Supermarket Tax Credit Program addresses the food security needs of communities across New Jersey by providing up to $40 million per year in tax credits to develop and sustain new supermarkets and grocery stores in food deserts, for a total of $240 million over six years. The NJEDA has identified 50 Food Desert Communities (FDCs) across the state in coordination with the Departments of Community Affairs and Agriculture. Tax credits are available to up to two eligible supermarkets or grocery stores in each FDC. The Food Desert Relief Supermarket Tax Credit Program was established by the New Jersey Economic Recovery Act (ERA) of 2020 and signed into law by Governor Phil Murphy in January 2021.
The Food Desert Relief Supermarket Tax Credit Program is comprised of two tax credits: the Financing Cap Tax Credit, applied for by a store’s developer, and the Initial Operating Costs Tax Credit, applied for by a store’s operator. For a single store to receive both credits, the applications must be reviewed and approved at the same time. Tax credits may be resold for a minimum of 85% of the transferred credit amount.
ELIGIBILITY
To receive tax credits through the Food Desert Relief Supermarket Tax Credit Program, supermarkets or grocery stores must:
- Be the first or second newly constructed or rehabilitated supermarket or grocery store in a designated Food Desert Community to be approved under this program. (Please consult the map of FDCs.)
- To qualify, the rehabilitation work done must affect at least 75% of the square footage of the supermarket or grocery store and must include repair or replacement of two or more major systems, including, but not limited to: (a) roof, (b) plumbing, (c) heating and cooling (including refrigeration), (d) electrical, (e) load bearing structural systems, or (f) weatherization (e.g. solar panels, siding, replacement windows, and doors). The cost of this repair or replacement, not including soft costs that are over 20% of the total cost, must be at least 60% of the fair market value of the supermarket or grocery store after the rehabilitation.
- Be a retail outlet with at least 16,000 square feet where at least 80% of square footage is occupied by food and related products.
- Devote at least 10% of retail space to fresh and/or frozen fruits and vegetables.
- Open the supermarket or grocery store for business to the public within 6 months of the receipt of a temporary certificate of occupancy or within three years of executing the incentive award agreement corresponding to the project (subject to possible extensions approved by the NJEDA).
- Commit to accept benefits from federal nutrition assistance programs, including SNAP and WIC.
- Demonstrate that the store would not be economically feasible without the tax credit award, but with the tax credit award, it would operate on a full-time basis for seven years after opening and be economically and commercially viable by the end of that period.
- Hold a public listening session in the Food Desert Community at least once a year.
AWARD SIZE
- Developers will be eligible to receive tax credits up to 40% of the total project cost for the first approved supermarket/grocery store in an FDC and up to 20% for the second approved supermarket/grocery store in an FDC, capped at the project financing gap.
- Owners/operators of supermarkets/grocery stores will be eligible to receive three years of tax credits up to 100% of initial operating costs for the first approved supermarket/grocery store in an FDC and up to 50% of initial operating costs for the second approved supermarket/grocery store in an FDC, capped at the initial operating shortfall.
FISCAL AND RESIDENT PROTECTIONS
In order to receive support through the Food Desert Relief Supermarket Tax Credit Program, an applicant must be in good standing with the NJ Department of Labor, NJ Department of Treasury, and the NJ Department of Environmental Protection. Entities receiving Food Desert Supermarket Tax Credits must also demonstrate that each worker employed to perform construction on the project is paid at or above the prevailing wage rate, as determined by the NJ Department of Labor and Workforce Development. A supermarket or grocery store developer may be eligible for a higher cap on the Financing Gap Tax Credit tax credit if the developer commits that workers at the supermarket will be covered by a Labor Harmony Agreement or collective bargaining agreement.
FEES
Fees are determined on a tiered basis, based on reasonable proxies for the complexity of a project and, therefore, the administrative expense and staff time required to evaluate the application and service it throughout the life cycle of the tax credit. For the Financing Gap Tax Credit, the tiers are based on total project costs. For the Initial Operating Costs Tax Credit, the tiers are based on total annual sales.
Type of Fee | Financing Gap Tax Credit | Initial Operating Costs Tax Credit | ||
Project Costs <$10MM | Project Costs ≥$10MM | Total Sales <$20MM | Total Sales ≥$20MM | |
Application | $2,500 | $10,000 | $2,500 | $5,000 |
Approval | $5,000 | $15,000 | $5,000 | $10,000 |
Issuance | $5,000 | $15,000 | $2,500 | $5,000 |
Annual Servicing (x7) | $2,500 | $10,000 | $2,500 | $5,000 |
Transfer | $5,000 | $15,000 | $5,000 | $10,000 |
Minor Modification | $2,000 | $5,000 | $2,500 | $5,000 |
Major Modification | $5,000 | $15,000 | $5,000 | $10,000 |