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| Programs
& Incentives |
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The New Jersey Economic Development Authority (“EDA”) offers a variety of programs that may be of interest to entities interested in pursuing redevelopment projects. The terms and conditions offered by the EDA and the lender that is selected to participate in any program offered by the EDA vary. 1.
Fund for Community Economic Development
Eligible Applicants: Community
economic development organizations in urban areas for loans
to micro and small businesses or for real estate development
projects. For-profit developers of real estate development projects
in urban and smart growth locations for feasibility studies,
other pre-development costs, and for development loans. Fees: Non refundable application fee of $500 and a closing fee. 2.
Local Development Financing Fund for Eligible Applicants: Developers of commercial and industrial projects located in urban aid communities. The municipality must sponsor the request for financial assistance. Funding: Loans ranging from $50,000 to $2,000,000 may be made for fixed assets such as buildings and equipment. Financing in the form of a permanent subordinated mortgage loan made at ½ of the Federal Discount Rate at the time of approval or 3%, whichever is greater. Term of up to 10 years with up to 25 year amortization. There is a required minimum of 1:1 public/private dollar match. Generally, financing is limited to no more than 25% of the total project costs. Fees: Non-refundable application fee of $500. 3. Smart Growth Pre-Development Funding Eligible Applicants: Developers undertaking commercial, industrial, office and mixed use projects in redevelopment areas. Short-term financing for pre-development site preparation costs (non-contamination related) including, but not limited to, land assemblage, demolition, removal of materials and debris, and engineering costs. Funding: Loans and guarantees of up to $1,000,000 for a maximum term of 3 years. Interest at below market rate, no lower than 3% adjusted quarterly. Collateral in the form of a personal guarantee and other tangible fixed assets will be required. Fees: Non-refundable application fee of $500 upon bank approval and non-refundable $50 commitment fee. Closing fee is ½ of EDA guarantee amount times the number of years the guarantee is in effect. Bank fees are negotiated with bank. 4. Real Estate Development Program Eligible Applicants: Developers undertaking redevelopment of existing buildings as part of a comprehensive redevelopment strategy. Eligible buildings are those used for manufacturing, distribution, or research activities, and certain mixed-use projects, involving office, retail, hotel, or entertainment uses. Joint ventures with developers and other private entities are also considered for projects that offer significant economic benefits. Projects must be consistent with EDA’s economic development mission, demonstrate future financial viability, and enjoy strong local support. Funding: Varies on a project by project basis. Fees: Negotiable. 5. Taxable Bond Financing Eligible Projects: EDA issued taxable bond financings include the purchase of land and buildings, the construction, expansion and renovation of buildings and the purchase of equipment. Proceeds of a taxable bond financing may also be used to refinance conventional, asset-based debt, and in some cases, for working capital. A project must maintain or expand employment in New Jersey, assist in the development or redevelopment of a municipality, maintain or increase the tax basis of a municipality, and maintain or diversify business industry in the State. Applicants must represent to the EDA that they would not proceed with their project at the present time or in present scope without the EDA’s assistance. Bonds are typically underwritten and publicly sold or privately placed with individuals or institutional investors. The applicant must secure a bond purchaser who will buy the bonds from the EDA with understanding that the State and the EDA are not guaranteeing any payment on the Bonds. Fees: Non-refundable application fee of $500, and a closing fee of ½ of tax-exempt closing fee which is ½% of total tax-exempt bond amount of up to $15,000,000, ?% of next $10,000,000 and ½% of bond amount in excess of $25,000,000. 6. Redevelopment Area Bond Financing Eligible Projects: The EDA may issue long-term, low-cost bonds on behalf of municipalities to fund infrastructure improvements, land acquisition, demolition, and brownfield remediation to support new development projects located within a designated redevelopment area and part of an approved redevelopment plan. The bonds are backed by payments in lieu of taxes pursuant to long term tax abatement agreements, negotiated by the developer and the municipality, and pledged by the municipality as security for the payment of the debt service on the bonds. Fees: Non-refundable application fee of $500, and a closing fee of ½% of bond amount up to $10,000,000 and ¼% above this amount. 7. Revenue Allocation District Funding Eligible Projects: A municipality may designate a Revenue Allocation District of up to 15% of the total taxable property in the community within an established redevelopment area. It may designate EDA to act on its behalf as a redeveloper and district agent for redevelopment projects. Responsibilities include land and property acquisition, demolition, renovations, improvements, or other items. Fees: Negotiable. 8. New Market Tax Credits Eligible Projects: Below-market equity investment capital, commercial loans, and home construction loans are available to businesses, developers, and home ownership projects in low income or distressed areas throughout New Jersey.
Fees: Non-refundable application fee of $500.
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