Last month the New Jersey Economic Development Authority (NJEDA) announced that it would begin taking applications for tax credits through New Jersey's Offshore Wind Tax Credit Program (the "Program") from businesses that make a capital investment of at least $50 million dollars in certain qualified offshore wind facilities within Burlington, Camden, Gloucester, Salem, Cumberland, Mercer or Cape May counties. The Program is designed to serve as a targeted business incentive focused on encouraging investments in large-scale, clean energy projects that the NJEDA hopes will create new opportunities for future job creation in southern New Jersey.
Qualifying Projects and Available Credits
Under the Program, a business may receive tax credits for up to 100% of capital investments made in a "qualified wind energy facility" located in a "wind energy zone" (hereinafter a "Qualified Facility") – which means generally properties located in the South Jersey Port District established pursuant to The South Jersey Port District Corporation Act (N.J.S.A. 12:I IA-I et seq.). Approved entities may elect to apply 10% of the total credit amount per year over a ten (10) year period against their corporate business or insurance premiums tax. Businesses may also choose to sell the Program tax credit for at least 75% of its value.
Eligibility Requirements
To qualify, a company must make a minimum capital investment of $50 million in a Qualified Facility. Companies may also lease space at a Qualified Facility and apply for tax credits under the Program in conjunction with other businesses. In this instance, the total investment must still reach the $50 million threshold and the proposed tenant company will be required to demonstrate that it made at least a $17.5 million dollar capital investment into the project. In addition, the tenant company must also occupy space in the Qualified Facility. In conjunction with the capital investment requirements, the Program also requires companies to demonstrate creation of at least three hundred (300) new, full-time jobs. The job requirement may be satisfied by job creation at the Qualified Facility or through demonstrating job creation through an equipment supply coordination agreement. All jobs will only be counted if the job-holder spends at least 80% of their time in New Jersey.
Other Considerations
The Program is capped at $100 million dollars and the tax credit amount made available to a qualifying business may be limited by a "net positive" economic benefits test, meaning projects must demonstrate that through its capital investment and job creation, the State of New Jersey will realize at least 110% of the total tax credit over a ten (10) year period. This ensures that the State will receive a return greater than the value of the credit. Businesses must apply for the Offshore Wind Tax Credit Program by July 1, 2024 and satisfy the capital investment and employment conditions for award of the credits by July 1, 2027.
Parker McCay's business, corporate and project finance attorneys have experience in advising clients on utilizing economic development programs designed to foster economic growth throughout the region. If you have questions regarding New Jersey's Offshore Wind Tax Credit Program, please contact our Corporate Department.
The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.