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Real Estate Alert: New Jersey Historic Property Reinvestment Program

By Jaime Reichardt, Alexander Lipkin .

On June 15, 2022, the New Jersey Economic Development Authority (“NJEDA”) launched its online application for the Historic Property Reinvestment Program. The program is a $50,000,000 tax credit program to support rehabilitation projects of identified historic properties. Qualified properties are considered income-producing and are individually listed or located in a district on the National Register of Historic Places, the New Jersey Register of Historic Places, or the Pinelands Commission. Additional qualified properties may be registered for protection as a significant historic resource by a municipality.

A rehabilitation project is defined as a specific construction project or improvement phase of a project undertaken by a business entity that includes the rehabilitation of a qualified property or transformative property. The period for rehabilitation begins after the rehabilitation agreement is executed with the NJEDA and may be 24 months or up to 60 months in the case of projects with distinct phases. Awards can vary in size depending on the eligible costs of the rehabilitation and depending on the type or property that is being rehabilitated. The award size can be:

  • 40 percent of the cost of rehabilitation up to a maximum of $4 million, for rehabilitation projects NOT located within a qualified incentive tract or within Atlantic City, Paterson, and Trenton;
  • 45 percent of the cost of rehabilitation up to a maximum of $8 million, for rehabilitation projects located within a qualified incentive tract (New Market Tax Credit-eligible areas within New Jersey) or Atlantic City, Paterson, and Trenton; or
  • 45 percent of the cost of rehabilitation up to a maximum of $50 million for rehabilitation projects that include a “transformative property” (specific properties defined by particular statutory criteria).

Furthermore, the state tax credit may be leveraged with the federal historic tax credit in order to enhance project returns and invite additional capital for the project.

A historic property rehabilitation project is eligible for a tax credit under the program if the business entity demonstrates to the NJEDA at the time of application that: (a) without the tax credit, the rehabilitation project is not economically feasible; and (b) a project financing gap exists. These tests are based upon specific data used by NJEDA and reasonable rates of return based on project type and location. Additionally, the developer must commit to paying prevailing wage rate(s) to each worker employed to perform construction work at the project. Ideally, construction should not be commenced prior to submitting the application with the EDA, and a developer (or sponsor) must provide 20 percent of the equity (10% for projects in Atlantic City, Paterson, and Trenton). That equity may include cash, deferred development fees, costs for project feasibility incurred within the 12 months prior to application, property or site value less any mortgages when the applicant/developer owns the project site, and any other investment approved by the NJEDA. Equity may also include proceeds from the sale of various federal tax credits, such as Historic Rehabilitation Tax Credits, Low Income Housing Tax Credits, and New Market Tax Credits.

The current application window closes on August 15, 2022, and can be found on the NJEDA’s website. Additionally, here are some helpful websites for assistance with identifying whether a property is potentially eligible:

Your Citrin Cooperman professionals are available to assist you with any questions regarding the NJEDA’s program for the History Property Reinvestment Program.

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