Posted on May 16, 2012 by Kimberly Freimuth

Updates on NJ Tax Credit Legislation

In the past we have written and presented on various tax credit programs. One of the most successful has been the program created pursuant to the Urban Transit Hub Tax Credit Act, signed into law as N.J.S.A. 34:1B-207 et seq. Its success has led to the subsequent passage of the Grow New Jersey Assistance Act earlier this year. That Act has been codified under N.J.S.A. 34:1B-242 et seq. Their success has significantly reduced the availability of credits which, arguably, deprives worthy projects of much needed capital.

To remedy this shortage, lawmakers have introduced A2442 and S1562 in the current legislative session. These bills propose to expand the allowable tax credits under the Urban Transit Hub Tax Credit Program from $1.5 Billion to $2.5 Billion and also to expand the allowable tax credits under the Grow New Jersey Assistance Program from $200 Million to $400 Million. 

Despite the success of the Urban Transit Hub Tax Credit program, the extent of the legislation’s fiscal impact is unclear and that may be a deterrent to passage. The Office of Legislative Services (OLS) has calculated a potential loss of revenue to the state equaling $1,000,000,000 through fiscal year 2027 on both that program’s and Grow New Jersey tax credits. There is also the potential for lost opportunity costs as the State’s funding is directed from one economic activity to another. These losses are potentially offset by the realization of capital projects in eligible areas which will benefit both the State and local governments.

Notwithstanding the uncertainty of projected fiscal impacts, the senate bill (S1562) extending the amount of allowable tax credits has been reported favorably by two committees—the Senate Economic Growth Committee and more recently the Senate Budget and Appropriations Committee. A2442 has been referred to the Assembly Commerce and Economic Development Committee. For further information regarding the Grow New Jersey Assistance Act, please refer “New Jersey’s Latest Tool for Economic Growth”, Real Estate Department Alert (January 2012). Please contact us for information on our webinar on the Urban Transit Hub Tax Credit program presented in December 2011.

In the February 2012 issue of “In The Zone”, we reported on pending legislation, A1450 and S141, commonly referred to as the Historic Property Reinvestment Act. This Act seeks to establish a New Jersey historic tax credit which can potentially be twinned with the Federal Historic Tax Credit administered by the National Parks Service. The State proposal targets both homeowners and businesses. While it caps a homeowner’s historic tax credit at $25,000, there is no cap for businesses. Further, the incentives differ, providing more flexibility with the tax credit program for businesses. Last year, nearly identical legislation, A1851, made its way through both legislative houses only to be vetoed by Governor Christie.

These bills are moving at a disappointing pace since their introduction earlier this year. As of this writing, only one legislative committee, the Senate State Government, Wagering, Tourism & Historic Preservation Committee, has conducted hearings on S141 and filed a favorable report with amendments to that legislation. The amendments are technical in nature and do not substantially change the bill as S141 was pre-filed for introduction in the 2012-2013 session pending technical review. In March, the committee performed its review and amended S141 to extend the deadlines by one fiscal year.

For further information, please refer to our article entitled The New Jersey Historic Tax Credit – Is Now The Right Time? published in the February 2012 edition of In The Zone or contact Jeffrey N. Hall or Daniel V. Madrid.

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Posted on April 18, 2012 by Kimberly Freimuth

Legislation Proposed to Amend EPA's Lead Renovation, Repair and Painting Rule

Remodelers and renovators will keep a watchful (and hopeful) eye on this new legislation.

Responding to concerns from the National Association of Home Builders, remodelers and affiliated trade groups, Sen. James Inhofe (R-Okla.) introduced legislation to make much-needed improvements to the Environmental Protection Agency’s Lead: Renovation, Repair and Painting (LRRP) rule on March 1, 2012.

The Lead Exposure Reduction Amendments Act of 2012 (S. 2148) was introduced with five original cosponsors: Sens. Charles Grassley (R-Iowa), David Vitter (R-La.), Michael Enzi (R-Wyo.), Tom Coburn (R-Okla.) and Roy Blunt (R-Mo.). The rule, which took effect on April 22, 2010, requires that remodelers and contractors working in homes built before 1978 be  trained and certified by the EPA on lead-safe work practices before they can legally work in those homes.

 

On July 6, 2010, the EPA removed the “opt-out” provision in the LRRP that allowed remodelers working in a home built prior to 1978 to forego more expensive work practices according to the owner’s wish if no children under the age of six or pregnant women resided there.  By removing the opt-out provision, the EPA more than doubled the number of homes subject to the LRRP, and the agency has estimated this will add more than $336 million per year in compliance costs to the remodeling community. 

 

Further, the EPA has failed to approve a test kit that meets the “false positive” and “false negative” criteria stated in the regulation. By not performing a study of lead exposure rates from work on commercial and public buildings, the agency has also exceeded its mandate granted by Congress by starting the process of extending the LRRP to those structures through an Advanced Notice of Proposed Rulemaking. 

 

Sen. Inhofe’s legislation would address these concerns and offer other reforms for EPA enforcement of the lead paint rule. Specifically, the bill would: 

 

  • Reinstate the opt-out provision to allow home owners without small children or pregnant women residing in them to decide whether to require LRRP compliance, not the government.
  • Suspend the LRRP if EPA does not approve a commercially available test kit that meets the regulation’s requirements.
  • Allow remodelers the “right to cure” paperwork errors found during an inspection.
  • Eliminate the “hands on” recertification training requirements.
  • Prohibit the EPA from expanding the LRRP to commercial and public buildings until at least one year after the agency conducts a study demonstrating the need for such an action.
  • Clarify the definition of “abatement” to specifically exclude remodeling and renovation activities.
  • Provide an exemption to the regulation for emergency renovations.
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Posted on April 3, 2012 by Kimberly Freimuth

New Lehigh Valley Office for Governor's Action Team

The Pennsylvania Department of Community and Economic Development announced last week the opening of a new office for the Governor's Action Team (GAT) in the Lehigh Valley.  The office will serve Berks, Lehigh, Monroe and Northampton counties.  A map of all of the GAT regions and a list of the regional directors can be found here. 

In a recent article,  Department of Community and Economic Development Secretary C. Alan Walker was quoted as saying the following with regard to the new office:

  • "This new office will give us the ability to respond more effectively to the job-creating opportunities presented by an increased level of business expansion and attraction activity in the region" 
  •  "We look forward to working with our local economic development partners and elected officials in the region to continue bringing economic investment and new jobs to Pennsylvania."

The Governor's Action Team is a group of economic development professionals who work with businesses that are looking to expand, locate or relocate in Pennsylvania, with a special emphasis on job creation in Pennsylvania. 

Team PA Foundation's website provides one example of how Team PA Foundation and GAT assisted a Spanish wind energy company that was looking to expand its operations in the United States and expressed an interest in coming to Pennsylvania.

 

Are you looking to expand or locate your business in Pennsylvania?  GAT may be able to provide you with assistance in site selection as well as provide forms of funding opportunities related to job creation. 

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Posted on March 22, 2012 by Kimberly Freimuth

Governor Signs Bill Amending KOZ, KOEZ and KOIZ Act

On February 14, 2012, Governor Corbett signed Act No. 16 of 2012, which amends the Keystone Opportunity Zone, the Keystone Opportunity Expansion Zone and the Keystone Opportunity Improvement Zone Act.  This legislation authorizes the extension of tax exemptions, deductions, abatements and credits, allows for the creation of additional expansion zones and the expansion of existing zones for job creation.  An overview of the Act is set forth in the Fiscal Note to the Act.

Businesses that operate in Keystone Opportunity Zones (KOZs) and Keystone Opportunity Expansion Zones (KOEZs) stand to have certain state and local taxes eliminated. Depending on the situation, the tax burden may be reduced to zero through exemptions, deductions, abatements, and credits for the following:

  • State Taxes: Corporate Net Income Taxes, Capital Stock & Foreign Franchise Tax, Personal Income Tax, Sales & Use Tax, Bank Shares and Trust Company Shares Tax, Alternative Bank and Trust Company Shares Tax, Mutual Thrift Institutions Tax, Insurance Premiums Tax.
  • Local Taxes: Earned Income/Net Profits Tax, Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile Taxes, Local Real Property Tax, Sales and Use Tax Length of Tax Relief.

The legislation does add more oversight on the part of the Department of Community and Economic Development (DCED).  DCED must provide an annual certification form to the business entity, that includes:

  • The type and duration of the zone designation.
  • The number of jobs created.
  • The number of jobs retained.
  • The amount of capital investment.
  • Any other information, conditions or requirements reasonably required by DCED.

In addition, DCED is responsible for monitoring:

  • Verifiable job creation and job retention data.
  • Information on job type and hourly wage.
  • Number of years in the program.
  • Annual, unduplicated public and private capital investment.
  • Business type and description.
  • Any other economic development assistance received from DCED.
  • Verifying that the businesses that relocate meet the increased full-time employment, capital investment or lease agreement requirements of the act.

Are you considering starting, relocating or expanding your business?  If so, you may want to consider the benefits to a KOZ, KOEZ or KOIZ.  Available sites in the Commonwealth can be searched through the Commonwealth's database.

 

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Posted on February 24, 2012 by Kimberly Freimuth

PA BUILDING CODE COMMITTEE SAYS NO TO 2012 ICC CODE REVISIONS

 

 

Herbert K. Sudfeld, Jr. is a colleague, mentor and friend who wrote this guest post:

 

If you are a builder in Pennsylvania, you will want to know that the Uniform Construction Code (“UCC”) Review and Advisory Council (“RAC”) voted not to adopt any of the 2012 International Code Council’s (“ICC”) Code revisions in Pennsylvania.

 

The ICC Codes, which get revised every three (3) years, are reviewed by the UCC RAC which makes recommendations to the PA. Dept. of Labor and Industry on the adoption of any revisions. Currently, PA Building Codes are based upon the 2009 ICC Codes and since no 2012 revisions were recommended, the 2009 ICC Code will continue to form the basis for the Pennsylvania Building Code and the building industry.

 

The RAC evaluates the changes looking at the public health, safety and welfare impact; the economic and financial impact; and the technical feasibility of the provisions. 

 

In addition to holding the line on any revisions, the RAC voted to send a recommendation to the Pennsylvania Legislature to further amend the UCC to extend the Code adoption cycle from every three (3) years to every six (6) years.

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Posted on February 14, 2012 by Kimberly Freimuth

To All Women in Business - Be Inspired to Be a Role Model

I recently came across a very interesting article in the Harvard Business Review titled:  America's Next Top Engineer:  She Needs Your Role Models by Linda Kekelis.  The article discusses the importance of women in business acting as a role model for younger women in order to dispel stereotypes.  There is a specific focus in the article on science, technology, engineering and mathematics.  I particularly like the statement:  "If we could only put the same level of resources into inspiring girls in science, technology, engineering, and mathematics (STEM) that we do into discovering America's Next Top Model...."  So true isn't it?  The article implores us -

"We have to go out of our way to provide such models because too few girls have made their way into technical fields in the past. We can't count on a girl's having a STEM role model already in the women she knows well—her mother, relatives, and neighbors. When a girl meets a woman succeeding in STEM, it expands the range of careers she considers as she imagines her own future."

The concept of the article can be applied in many industries.  I urge you to apply it to your own industry.  I have been inspired to be a role model - have you?

 

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Posted on February 7, 2012 by Kimberly Freimuth

HUD Approves Loan Guarantee to City for Redevelopment Project

In a recent press release, the U.S. Department of Housing and Urban Development (HUD) announced its approval of an $8.8 million Section 108 loan guarantee to the City of Durham for the Southside/Rolling Hills Neighborhood Redevelopment Project, which is located within a HUD-approved Neighborhood Revitalization Strategy Area.  The City Council approved funding for the project back in September 2011.  The project will consist of three phases of rental development and three phases of home ownership development.

HUD's Section 108 Loan Guarantee Program is part of the Community Development Block Grant (CDBG) program.  The Section 108 loan guarantee program provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects.  It can be a useful tool in attracting private developers to distressed areas.  Under this program, there is risk to the local government, as it must pledge its current and future CDBG allocations as security for the loan. 

Do you have an economic development project worthy of pitching to a local government for funding under the Section 108 loan guarantee program?  

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