n the course of servicing our clients, we experience that at some time a few may consider relocating to other states. More often than not, the driver of the consideration for a move is either lower overall market pricing or more favorable zoning. While The Blau & Berg Company is better known as a brokerage firm with a very active practice in Northern and Central New Jersey, the firm has brokers licensed in New York and Pennsylvania for many years. When clients become aware of our tri-state affiliations, however, the question may be asked, “How do the incentive programs of the three states compare with one another?”
That question was posed to me recently and it would seem like a reasonable inquiry and a relatively straight forward analysis. However, the States’ different approaches required by their different geographic realities and constituencies and numerous diverse programs can provide only a few head to head comparisons even within the limited areas of financing and tax incentives. This breadth of programs in no small part is the impetus for the 2010 creation of the New Jersey Partnership for Action led by the Lt. Governor. The PFA includes:
- Choose New Jersey, Inc., a recognized 501 (c) (3) non-profit organization
- The New Jersey Business Action Center (BAC), which applies a proactive, customer-oriented approach to businesses’ interactions with state government. BAC personnel will evaluate all of the programs available to an individual company and produce a full proposal to the firm based on their analysis of the company’s qualifications.
- The New Jersey Economic Development Authority (NJEDA), which serves as the State’s financing arm
- The Office of the Secretary of Higher Education, which coordinates, plans, and develops policies, and advocates for the State’s higher education system
NEW JERSEY AND NEW YORK PROGRAM COMPARISON
(according to the state of New Jersey website)
GROW NEW JERSEY ASSISTANCE PROGRAM TAX CREDITS
- Corporate income tax credits available up to 10 years
- Unused tax credits transferable and saleable at a discount
- Minimum of 10 to 50 new or retained jobs, depending on industry type
- Jobs can be new to NJ or retained in state (retained jobs allowed only 50% of credit value)
- Capex based on investment per square foot (psf) ($20 psf to $120 psf, depending on project type)
- Incentives available across the state
- No limits on building square footage
- All industries eligible, with bonus for target industries
- Base awards from $500 to $5,000 per job, per year, for up to 10 years
- Bonuses in Garden State Growth Zone (GSGZ) Cities; Urban Transit Hub (UTH) cities, distressed cities; and 8 southern NJ counties
- Bonus awards of $250 to $3,000 per employee, per year, based on factors such as location, industry, salary levels, capex, # of jobs, environmental investment
- Approved incentives amount based on net benefits test for NJ
START-UP NY TAX-FREE LOCATIONS
- No capex minimums
- No job number minimums, but new jobs to NY must be created
- No corporate income tax, real property tax, sales tax, employee income tax for up to 10 years
- Incentives only available in specific locations associated with a state or private college. Depending on location of college, only space on-campus or within 1 mile can be used
- Space limited to 200,000 SF in any one location
- Business must be allied with school’s academic mission
- All industry types eligible except retail, wholesale, law, accounting, retail banking, medical, utilities, real estate management, restaurants, hospitality
- In Downstate locations, businesses must be high-tech or start-up
The foregoing not withstanding New York State has at least ten other tax incentive programs that are fact specific with respect to qualification. Additionally, there are fifteen or more grant and funding programs including JOBS Now, geared for large projects that create over 300 jobs and afford up to $10,000 per job grant for project development.
- Pennsylvania’s effort to streamline fact finding and eligibility is through Pennsylvania First operated through the state economic development level. A description of the project is sent to office of economic development and it is evaluated for applicable tax and funding possibilities. The program can produce a combination of grants, loans and loan guarantees for uses including machinery and equipment, job training, land and improvements, working capital, remediation for companies whose plans offer substantial economic impact for the Commonwealth or the locality or region. Job creation or preservation is a key element as is private funds matching. Single application. Maximum amount of assistance is $5,000 per job.
- Job Creation Tax Credit. A $1,000 non-refundable corporate income tax credit for each new job created within three years to those companies that create at least 25 jobs or expand their existing work force by at least 20%. Tax credits may not be used until the jobs are created.
- Given the size of the state and number of affected regions the incentives are location sensitive. Each county administers incentive programs through a designated COED and the Department of Community and Economic Development (DCED). Significant savings can be generated for companies that can locate with a Keystone Opportunity Zone. This includes Keystone Opportunity Zones, Keystone Opportunity Expansion Zones and Keystone Opportunity Improvement Zones. Through credits, waivers and tax abatement total taxes on economic activity are reduced. These require annual requalification and existing Pennsylvania businesses from a non KOZ, must increase employment at least 20% and make a significant investment immediately following relocation to the zone. Participants can pay no taxes in the following categories: Corporate income tax, Personal income tax, Sales and use tax, Earned Income tax, Business gross receipts tax, Property tax, et al.
Pennsylvania has at least ten other applicable financing vehicles and five tax credit programs. As a result of continuing competition for job development, there are now many tools for assistance in developing them with the aid of funding and grants. Some are very job specific. It is incumbent on business enterprises to investigate what opportunities to which they may avail themselves based on their specific project. Each state has made efforts to create a business assistance office to help guide them through the process and maximize utilization of existing programs.
If you would like information regarding these contacts, please feel free to contact our offices.