CoreNet Global NJ Chapter Attracting Business to the Garden State
Lt. Governor Kim Guadagno
CoreNet Global NJ Chapter Attracting Business to the Garden State
New Jersey Business Action Center Michael Van Wagner, Executive Director
New Jersey Partnership for Action
Lt. Governor Kim Guadagno
From Fortune 500 firms to small and mid-sized businesses, the Partnership for Action has worked to retain and attract more than 250 companies that have
committed to generate and retain over 70,000 jobs and spur a total of $11 billion in public-private investment.
SSM INDUSTRIES INC.
The “One-Stop-Shop” for Business
Business Advocacy Focusing On Retention and Attraction
Identifies and Matches State Programs and Resources to Business’ Needs
Provides Site Selection Services
Assists with Permitting and Regulatory Issues
Advances Global Competitiveness of New Jersey Companies
Central Contact for Post-Sandy Assistance
BAC Advocacy & Outreach
Advocate for Business– On Call 24/7– In-Depth Proposal & Incentive Package
BAC Role in Attraction/Expansion & Retention Projects– Full Scope of Project Management– Permitting & Regulatory Assistance– Site Selection Services
New Wave of Economic Development
Team Effort/ Involved Participants
– All Levels of Government & Agencies– Active/Positive Engagement– Local, State & County– Diverse Resources to Aid Economic Development
Flexible Outlook
– Responsiveness – Confidentiality
New Wave of Economic Development
BAC advocates prepared full proposal package
BAC provided ongoing outreach and advocacy related to permitting, land use, zoning issues and property tax abatement programs
BAC facilitated meetings between Amazon representatives, Robbinsville Mayor and local officials on incentive options
Robbinsville Township approved a Payment In Lieu of Tax Incentive (PILOT) for the proposed site.
May 2012 Governor Christie announces Amazon deal.
Consolidated 3 locations into the 800,000 sq Alcatel-Lucent campus in Whippany
Required coordinated stakeholder meetings :– Bayer Leadership– Governor’s Office– Department of Transportation – Board of Public Utilities– Department of Labor– County Economic Development Office– Project developer
April 2011, Bayer HealthCare announced New Jersey as the new “home” of Bayer HealthCare’s east coast headquarters
New Wave of Economic Development
CoreNet Global NJ Chapter Attracting Business to the Garden State
Choose New Jersey Michael Winter, Chief Administrative Officer
Choose New Jersey, Inc. Mission
Choose New Jersey, Inc. is an independently funded and operated 501(c)(3) nonprofit organization
Mission is to encourage and nurture economic growth through the state of New Jersey, including a focus on making New Jersey’s most distressed cities engines for growth and opportunity.
Ambassadors & Partners
IBEW 351
IBEW 102
Choose New Jersey’s Role
Generating Awareness
Generating Conversations
Generating Jobs & Investment
Choose New Jersey’s RoleAwareness
Conversations
Generating Buzz
Generating Investment
CoreNet Global NJ Chapter Attracting Business to the Garden State
New Jersey Economic Development Agency Tim Lizura, President and COO
NJ Economic Opportunity Act of 2013 The New Jersey Economic Opportunity Act of 2013 merges the State’s economic
development incentive programs with the goal of enhancing business attraction, retention and job creation efforts and strengthening New Jersey’s competitive edge in the global economy.
The Grow New Jersey Assistance Program (Grow NJ) is now the main job creation incentive program and the Economic Redevelopment and Growth Program (ERG) is the State’s key developer incentive program. Both programs have been expanded and will sunset July 1, 2019.
The Act also extends application deadlines for support through the Public-Private Partnership (P3) Program and Offshore Wind Economic Development Program.
Grow NJ ERG
– Base tax credits ranging from $500 to $5,000 per job, per year; bonus credits ranging from $250 to $3,000 per job, per year
– Expanded geographic boundaries– Reduced capital investment and
employment eligibility
– Increased State and local incentive grants - bonus awards to incentivize targeted development goals
– Expanded geographic boundaries– Tax credits allocated for residential
projects
Grow NJAreas of Eligibility
Mega Projects Logistics, manufacturing, energy, defense, or maritime businesses in a port district
or businesses in the aviation industry located in an aviation district with: 1) Cap. investment of $20 million+ and 250 jobs created or retained; or, 2) 1,000 jobs created or retained.
Businesses located in an Urban Transit Hub with cap. investment of $50 million+ and 250 jobs created or retained.
Garden State Growth Zones (GSGZ) Camden, Trenton, Paterson and Passaic – the New Jersey cities with the lowest
median family income based on the 2009 American Community Survey from the US Census
Distressed Municipalities A municipality that is qualified to receive assistance under the Municipal Urban Aid
Program; is under the supervision of the Local Finance Board; identified by DCA to be facing serious fiscal distress; a SDA municipality; or a municipality boasting a major rail station.
Grow NJAreas of Eligibility
Priority Areas Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), a designated center
under the State Development and Redevelopment Plan or a designated growth center in an endorsed plan;
Areas that intersect with portions of: a deep poverty pocket, a port district, or federally owned land approved for closure under a federal Base Realignment Closing Commission action;
Proposed site of a disaster recovery project, a qualified incubator facility, a highlands development credit receiving area or redevelopment area, a tourism destination project, or transit oriented development;
Areas that contain a vacant commercial building having over 400,000 sq.f. of office, lab, or industrial space available for occupancy for a period of over one year; or a site that has been negatively impacted by the approval of a Hub-supported project.
Other Eligible Areas Areas not located within a distressed municipality or priority area, including an
Aviation District; Planning Area 3; certain portions of Meadowlands, Pinelands and Highlands; and certain portions of Planning Areas 4A, 4B & 5.
Grow NJCapital Investment & Employment Requirements
Minimum Capital Investment Requirements $/Square Foot
Industrial – Rehabilitation Projects $20
Industrial – New Construction Projects $60
Office – Rehabilitation Projects $40
Office – New Construction $120
Minimum capital investment amounts are lowered to 2/3 in GSGZs and in eight South Jersey counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, Salem
Minimum FT Employment Requirements New/Retained FT Jobs
Tech Start Ups and Manufacturing Businesses 10/25
Other Targeted Industries 25/35
All Other Businesses/Industries 35/50
Minimum employment numbers are lowered to 3/4 in GSGZs and in eight South Jersey counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, Salem: 8/19; 19/27; 27/38, respectively.
Grow NJBonus – Type & Amount
Bonus Type* Bonus AmountDeep poverty pocket or Choice Neighborhood Transportation Plan area $1,500 Qualified incubator facility $500Mixed-use development - mod. income housing for min. of 20% of full-time employees $500Transit oriented development $2,000Excess capital investment in industrial site for industrial use - Excludes mega projects $3,000 maximumExcess capital investment in industrial site for industrial use - Mega projects or GSGZ projects $5,000 maximumAverage salary in excess of county’s existing average or in excess of average for GSGZ $1,500 maximumLarge number of new and retained full-time jobs
251 to 400401 to 600 601 to 800
801 to 1,0001,001+
$500$750
$1,000$1,250$1,500
Business in a targeted industry $500
Exceeds LEED “Silver” or completes substantial environmental remediation $250Located in a municipality in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties with MRI Index greater than 465
$1,000
Located within a half-mile of any new light rail station $1,000Projects generating solar energy for onsite use $250
*Summarizes bonus types most widely applicable
Grow NJTax Credit Amounts: Base + Bonus = Gross
*Urban Transit Hub Municipalities include Bridgeton, Mount Holly, Salem, and West New York, in addition to the nine municipalities eligible under the UTHTC Act: Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson, and Trenton.
Project Type Base AmountPer New or Retained FT Job,
Per Year
Maximum AmountPer New or Retained FT
Job, Per Year
Annual AmountTo Be Applied By The
Business Annually
Mega Project $5,000 $15,000 $30 million
GSGZ $5,000 $15,000 $30 million$35 million-Facility in certain
GSGZ municipalities (Camden)
Urban Transit Hub Municipality*
$5,000 $12,000 $10 million
Distressed Municipality $4,000 $11,000 $8 million
Priority Area $3,000 $10,500 $4 millionbut not more than 90% of
withholdings
Other Eligible Area $500 $6,000 $2.5 millionbut not more than 90% of
withholdings
Disaster Recovery Project $2,000 $2,000
Grow NJFinal Total Tax Credit Amount
Each new full-time job = 100% tax credit
Each retained full-time job = 50% tax credit*
*Tax credits for retained jobs increases to 100% in certain cases
– All projects are subject to a comprehensive net benefit analysis to verify that the revenues the State receives will be greater than
the incentive being provided.
– For projects approved for $40 million or more over the term ($4 million annually), the EDA will award only funds necessary to complete a project or the amount permitted under the statute, whichever is less.
Grow NJFor a project located in Camden:
Jobs – Minimum Cap Investment – Minimum Total Tax Credit Per Job Maximum; equal to the greater of: total tax credit
amount for a qualifying project in a GSGZ or total cap investment of the project divided by the total number of
new full-time jobs
35 $5 million $20 million
70 $10 million $30 million
100 $15 million $40 million
150 $20 million $50 million
250 $30 million Uncapped
ERGIncentive Amounts
State and Local Incentive Grants The Act authorizes a bonus of 10% in certain cases, up to
a maximum of 30% of total project costs; 40% for projects in a GSGZ.
For Local Incentive Grants, up to a maximum of 100% if the developer is a municipal government or redevelopment agency
All projects are subject to a comprehensive net benefit analysis to verify that the revenues the State receives will be greater than the incentive being provided.
ERGBonus Awards
Bonus of up to 10% if project is:
Located in a distressed municipality: – lacking access to nutritious food, and will include a supermarket or grocery
store (min. of 15,000 sq ft of space) selling fresh products or a prepared food establishment selling nutritious, ready to serve meals; or,
– lacking access to health care and health services, and will include a health center (min. of 10,000 sq ft of space) devoted to providing these services
Transit project Qualified residential project with at least 10% of units constructed as and
reserved for moderate income housing Located in a highlands development credit receiving area or redevelopment
area Located in a GSGZ Disaster recovery project Aviation project Tourism destination project Substantial rehabilitation or renovation of an existing structure(s)
ERGQualified Residential Projects
Of the $600 million authorized for qualified residential projects*:
$250 million for projects within Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties, of which:– $175 million for projects in Camden– $75 million for projects in municipalities with a 2007 MRI Index of 400 or higher
$250 million for qualified residential projects located in:– Urban Transit Hubs that are commuter rail in nature– A Garden State Growth Zone– Disaster recovery projects– SDA municipalities located in Hudson County that were awarded State Aid in
FY 2013 through the Transitional Aid to Localities Program
$75 million for projects in distressed municipalities, deep poverty pockets, highlands development credit receiving areas or redevelopment areas.
$25 million for projects located within a qualifying ERG incentive area.
*The Act does not change the existing requirement that residential projects receiving an ERG must dedicate 20% of a project to low and moderate income housing
EDA is no longer accepting applications for assistance under the Business Employment Incentive Program (BEIP), Business Retention and Relocation Assistance Grant Program (BRRAG), and Urban Transit Hub Tax Credit Program (UTHTC).
– All pending BEIP and BRRAG applications will be acted on by December 31, 2013.
– All non-residential, pending UTHTC applications will be acted on by December 31, 2013. Residential applications submitted under the December 2012 competitive solicitation will be acted on within 120 days of the Act's September 18, 2013 effective date.
Businesses that had submitted an application under Grow NJ or ERG before enactment can amend the application to receive more favorable terms under the provisions of the revised programs.
BEIP, BRRAG & UTHTC
Grow NJ and ERGNew Application Deadlines
Grow NJ applications must be filed by July 1, 2019.
– Businesses must submit documentation indicating it has met agreed upon capital investment and employment requirements within three years of EDA approval.
– EDA can grant two, 6-month extensions.
ERG applications must be filed by July 1, 2019.
– Applications for a qualified residential project must be filed by July 1, 2015, and the developer must obtain a temporary certificate of occupancy for the project no later than July 28, 2015.
EDA anticipates launching the new programs in November 2013.
New Jersey Business Action Center866-534-7789www.NewJerseyBusiness.gov
Choose New Jersey, Inc.(609) 297-2186www.ChooseNJ.com
New Jersey Economic Development Authority(609) 858-6675www.njeda.com
Incentive Trends
Tuesday, October 8, 2013
Presenter: Carl S. Nerlich, Senior Manager Northeast Area, Business Incentives Ernst & Young LLP
Page 34
Agenda
►Understanding the issues
►Investments made in the U.S. during 2012
►EY Survey
►Incentive Trends
►Questions
Page 35
Understanding the issues
In today’s global economy…
► Global economy = greater competition
► More companies seeking the means to better optimize performance
► State and local governments anxious to stabilize or expand the tax
base, improve business retention, and stimulate job growth
► Global competition for corporate investment in relocation, expansion,
or revocation
… the stakes are high.
Page 36
Understanding the issues
As a result…
► The role of C&I in attracting and retaining businesses is significantly more influential
► Governments becoming more aggressive to remain competitive
► Need for flexibility and creativity due to budget constraints► International governments are creating incentives to attract targeted
industries
… entities must devote more attention and resources to the design, scale, scope, and accessibility of C&I programs.
Investments made in the U.S. during 2012
Page 38
Which industries saw investment in 2012?
Sector IndustryInvestment
(in US$ millions) Jobs
Agriculture, construction, oil/gas extraction and services Oil/gas extraction and services 13,870 8,113 Agriculture and construction 905 3,567 Non-durable manufacturing Chemical and petrochemical 34,311 11,119
Rubber and plastics 7,329 6,152 Food and beverage 6,627 20,214 Petroleum and coal products 3,172 7,555 Pharmaceutical 2,868 16,810 Other non-durable 2,323 9,990 Subtotal: Non-durable manufacturing 56,630 71,840
Durable manufacturing Semiconductor and electronic component 13,194 25,419 Transportation vehicle 10,655 38,771 Machinery and fabricated metal 8,942 34,978 Other durable manufacturing 2,625 14,099
Subtotal: Durable manufacturing 35,416 113,267Information Information 2,369 9,305 Data centers 2,293 5,275 Financial and professional services Professional services 3,947 34,835 Financial, insurance, and real estate services 2,963 22,125 Business support services 1,208 21,345 Health care and social assistance 442 1,968 Other services 796 5,638 Subtotal: Financial and professional services 9,355 85,911 Trade and transport Wholesale and retail trade 6,352 35,058 Transport, storage and logistics 4,343 17,799 All included industries Total 131,532 350,135
Source: EY USIM based on Conway data and EY research.
Page 39
Which states were the most successful at growing employment by attracting facilities?
Source: EY USIM based on Conway data and EY research.Note: Data on California is incomplete.
Page 40
Top 20 mobile projects ranked by capital investment, 2012
Source: EY USIM based on Conway data and EY research.
Company Name State ProductInvestment
(in US$ millions) Jobs
Sasol Ltd. LA Gas-to-liquids; Petrochemicals 8,500 835
Sempra Energy/Cameron LNG LA LNG 6,000 130
Chevron Phillips Chemical Co. TX Petrochemicals 5,000 400
Samsung TX Semiconductors 4,000 500
Intel Corp. OR Semiconductors 3,000 Undisclosed
GlobalFoundries NY Semiconductors 2,300 250
Shell Oil Company PA Petrochemicals 2,000 450
Formosa Plastics Group TX Plastics 1,700 225
The Dow Chemical Co. TX Petrochemicals 1,700 150
Port Neal Corporation (CF Industries) IA Nitrogen Fertillizer 1,700 100
Williams Partners LP WV Natural Gas 1,340 100
Iowa Fertilizer Co./Orascom Construction IndustriesIA Nitrogen Fertilizer 1,300 165
Cenex Harvest States ND Nitrogen Fertilizer 1,200 150
Celanese Corp. TX Petrochemicals 1,000 Undisclosed
Ineos USA Llc TX Petrochemicals 1,000 Undisclosed
Baxter International, Inc. GA Biological Products 1,000 1,500
The Dow Chemical Co. TX Petrochemicals 1,000 70
Apple, Inc. NV Data Center 1,000 35
Ohio Valley Resources Llc IN Nitrogen Fertilizer 952 80
Benteler Steel & Tube LA Steel Tubes 900 675
Page 41
Top 20 mobile projects ranked by new and retained jobs, 2012
Source: EY USIM based on Conway data and EY research.
Company Name State ProductInvestment
(in US$ millions) Jobs
Apple, Inc. TX Wireless Equipment 304 3,600
Kohls Corp. WI Clothing 250 3,000
Exxon Mobil Corp. TX Petroleum Undisclosed 2,000
BB&T Corp. NC Financial Services - 1,700
Ericsson TX Telecom Equipment 54 1,600
Baxter International, Inc. GA Biological Products 1,000 1,500
General Motors Co. MI Innovation Center 300 1,500
Caterpillar, Inc. GA Tractors 200 1,400
The Boeing Co. OK Aircraft Undisclosed 1,350
Vistaprint Usa Incorporated MA Printed Products 57 1,180
Wingspan Portfolio Advisors Llc TX Financial Services 3 1,100
Daimler Trucks North America Llc NC Highway Trucks Undisclosed 1,100
Amazon.com, Inc. IN Distribution Center 150 1,050
Bridgewater Associates Limited Partnership CT Financial Services 750 1,000
Airbus AL Aircraft 600 1,000
Panasonic Corp. NJ Consumer Electronics 190 1,000
Philadelphia Energy Solutions PA Oil 140 1,000
Southwest Airlines Co. TX Airlines 100 1,000
Nissan North America Inc. MS Automobiles 20 1,000
Austal Usa Llc AL Ships 5 1,000
EY Survey
Page 43
Ernst & Young LLP 2013 Survey
► Key Insights► Companies are increasingly active in capturing business
incentives and tax credits► 36% – more active in past two years
► 55% – about as active as in the past
► 7% – less active than in the past
► 2% – don’t know
► C-suite executives otherwise occupied► 16% – “very” aware of the potential benefits
► 36% – somewhat aware
► 20% – not at all aware
► 28% of executives responding to the question, say their most senior executives are more aware
Page 44
Ernst & Young LLP 2013 Survey
► Nearly 7 out of 10 executives – 68% – expect their companies to pursue significant if not aggressive capital expansion over the next 24 months.► 34% – anticipate moderate growth (5% - 10%)
► 19% – anticipate strong growth (10% - 20%)
► 15% – anticipate aggressive growth (20% plus)
► 25% – no change
► Resources devoted to C&I► 87% – less than 1 FTE
► 11% – 1-3 FTEs
► 2% – greater than 3 FTEs
► Nearly half of executives, 48%, say their organizations have no tools to track and analyze business incentive and tax credit activities.
Page 45
Ernst & Young LLP 2013 Survey
Barriers► Respondents reported a range of hindrances to capturing
incentives, such as: ► Too busy to execute on the requirements
► Program requirements too burdensome
► Lack of timely information on transactions
► Company is in a loss position and cannot take advantage of tax credits
Feedback for Governments/Economic Development► Address corporate challenges in C&I
► Develop more streamlined application and approval processes
► Require less in terms of back-end administrative compliance
► Offer more in terms of sale, assignment, or transfer mechanisms
Incentive Trends
Page 47
Key trends for credits and incentives
► Governors focused on eliminating income tax► Examples: Louisiana, North Carolina, Nebraska
► Alternate revenue sources cited to be sales tax
► State income tax credits
► Rise in non-income tax incentives
► Rise in tax credit transferability and monetization
Page 48
Other trends impacting incentives
► Globalization continues as do global incentives► Re-shoring on the rise
► Resurgence in manufacturing underway► Re-invention and re-tooling
► Utility and transportation costs
► Labor costs (increased skills)
Page 49
Company preferences in the new economy
► Cash grants or cash equivalents
► Above the line savings
► Non-income tax benefits, including exemptions/rebates of transaction taxes
► Unique/creative responses addressing specific business drivers
► Culture of collaboration and acknowledgement of the benefits
associated with win-win result
► Benefits to company
► Benefits to community
► Benefits to workforce
► Benefits to state
► Anticipate performance requirements
Page 50
How are incentives programs evolving to meet both Economic Development and Company needs?
► Realization
► Increased closing funds
► Withholding tax rebates
► Negotiability - flexibility
► Targeted sectors (e.g. data centers) and demographics
(veterans, unemployed workers)
► Sustainability incentives
► Supply chain spin-offs
► Workforce re-investment
Page 51
State trends for incentives
► States are leaving the traditional “Tier Based” incentive programs and are moving towards more cash based incentives.
► Ex. cash grants, refundable/monetized tax credits, sales and use tax refunds, etc.
► Front loading of property tax abatements to offset start-up costs
► Monetizing of income tax credits
► Expedited permitting / fee waivers
► Sales and Use tax rebates and exemptions
► Equipment, energy used in manufacturing, construction materials
► Utility incentives
► Climate and Sustainability incentives
► Designation of special incentive zones
► Enterprise Zones, Opportunity Zones, Brownfield sites, etc.
Page 52
Questions
Page 54
Circular 230 disclaimer
Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.
These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.