Recent NJ Legislative Activity on Real Estate Tax Credits

The legislative process in New Jersey becomes very interesting in the month of June when all legislative and executive eyes focus on the budget proposal and deals may be struck on other pieces of legislation to build support for the budget.  This month should prove to be no exception.  While we will not discuss the budget process as it affects New Jersey tax credits, the negotiations over the budget could have a direct impact on some key programs.  This article will focus on updates regarding bills related to programs that we have previously discussed in earlier posts and in the In the Zone publication.

We previously reported on legislation which would raise the maximum allowable tax credits under the Urban Transit Hub Tax Credit Act and under the Grow New Jersey Assistance Act.  These bills, A2242 and S1562, seek to increase the UTHTC Credits from 1.5 billion dollars to 2.5 billion dollars and tax credits under the Grow New Jersey Assistance Act from 200 million dollars to 400 million dollars.  The Assembly bill, A2442, has not received any attention since its introduction in February of this year.  On the other hand, the Senate version, S1562, sailed through two committees and was reported favorably by the second committee in early March of this year.  Until the end of last month, that bill sat but on May 31, it was passed unanimously by the Senate 35 to 0.  Earlier this month, the Senate bill was received by the Assembly and referred to the Assembly Commerce and Economic Development Committee.

It is anticipated that A2442 will receive favorable attention by the Assembly Committee.  The UTHTC program has been highly successful and the tax credits it has generated have been a significant component of capitals stacks in numerous projects in several of the eligible municipalities.  However, the program has been a victim of its success as the eligible credits have been gobbled up and presumably worthy projects may be at risk for lack of credits. 

We expect favorable action by the Assembly.  If that happens then, a bill will arrive at the Governor’s desk accompanied by vigorous lobbying behind the scenes to urge the Governor to sign the bill.  While there are other pending bills that seek to either tweak or radically change this tax credit program, they seem to be garnering little attention at this time.  One significant oversight is the disparity in distribution of urban transit hub tax credits to the eligible municipalities.  Whether that New Jersey legislature will address the historic disparity remains remains an open question.   For more information on these tax credit laws, please see our prior article.

A1450 and S141, the New Jersey Historic Property Reinvestment Act, has not progressed in either house, a curious result.  Last year, the identical legislation made it to the Governor’s desk only to be vetoed. As the bill presently stands it seeks to aid many without consideration of economic need.  Perhaps with a more surgical approach -- for example, permitting tax credits in urban cities in need of redevelopment -- it will draw favorable action. For more information on this proposal, please consult our prior article.

In view of our readership, two pieces of legislation proposing tax incentives to “distressed shopping centers” deserve a quick note.  These bills are proposing tax incentives to encourage revitalization of partially or completely vacant shopping centers.  A204 and S1002 propose a tax credit of $15,000 up to 50% of the corporate business tax liability while the other, A434, proposes an array of tax incentives including tax credits, rebates, reimbursements, exemption and skill training to tenants of eligible shopping centers. In the case of all of this legislation, there are prerequisites to eligibility.  We will follow their progress and, if warranted, report more thoroughly in the near future.

For further information, contact Jeffrey N. Hall or Daniel V. Madrid.

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.