c orenet global nj chapter attracting business to the garden state lt. governor kim guadagno

CoreNet Global NJ Chapter Attracting Business to the Garden State

Lt. Governor Kim Guadagno


New Jersey Business Action Center Michael Van Wagner, Executive Director

New Jersey Partnership for Action

Lt. Governor Kim Guadagno

From Fortune 500 firms to small and mid-sized businesses, the Partnership for Action has worked to retain and attract more than 250 companies that have

committed to generate and retain over 70,000 jobs and spur a total of $11 billion in public-private investment.

SSM INDUSTRIES INC.

The “One-Stop-Shop” for Business

Business Advocacy Focusing On Retention and Attraction

Identifies and Matches State Programs and Resources to Business’ Needs

Provides Site Selection Services

Assists with Permitting and Regulatory Issues

Advances Global Competitiveness of New Jersey Companies

Central Contact for Post-Sandy Assistance

BAC Advocacy & Outreach

Advocate for Business– On Call 24/7– In-Depth Proposal & Incentive Package

BAC Role in Attraction/Expansion & Retention Projects– Full Scope of Project Management– Permitting & Regulatory Assistance– Site Selection Services

New Wave of Economic Development

Team Effort/ Involved Participants

– All Levels of Government & Agencies– Active/Positive Engagement– Local, State & County– Diverse Resources to Aid Economic Development

Flexible Outlook

– Responsiveness – Confidentiality


BAC advocates prepared full proposal package

BAC provided ongoing outreach and advocacy related to permitting, land use, zoning issues and property tax abatement programs

BAC facilitated meetings between Amazon representatives, Robbinsville Mayor and local officials on incentive options

Robbinsville Township approved a Payment In Lieu of Tax Incentive (PILOT) for the proposed site.

May 2012 Governor Christie announces Amazon deal.

Consolidated 3 locations into the 800,000 sq Alcatel-Lucent campus in Whippany

Required coordinated stakeholder meetings :– Bayer Leadership– Governor’s Office– Department of Transportation – Board of Public Utilities– Department of Labor– County Economic Development Office– Project developer

April 2011, Bayer HealthCare announced New Jersey as the new “home” of Bayer HealthCare’s east coast headquarters



Choose New Jersey Michael Winter, Chief Administrative Officer

Choose New Jersey, Inc. Mission

Choose New Jersey, Inc. is an independently funded and operated 501(c)(3) nonprofit organization

Mission is to encourage and nurture economic growth through the state of New Jersey, including a focus on making New Jersey’s most distressed cities engines for growth and opportunity.

Ambassadors & Partners

IBEW 351

IBEW 102

Choose New Jersey’s Role

Generating Awareness

Generating Conversations

Generating Jobs & Investment

Choose New Jersey’s RoleAwareness

Conversations

Generating Buzz

Generating Investment


New Jersey Economic Development Agency Tim Lizura, President and COO

NJ Economic Opportunity Act of 2013 The New Jersey Economic Opportunity Act of 2013 merges the State’s economic

development incentive programs with the goal of enhancing business attraction, retention and job creation efforts and strengthening New Jersey’s competitive edge in the global economy.

The Grow New Jersey Assistance Program (Grow NJ) is now the main job creation incentive program and the Economic Redevelopment and Growth Program (ERG) is the State’s key developer incentive program. Both programs have been expanded and will sunset July 1, 2019.

The Act also extends application deadlines for support through the Public-Private Partnership (P3) Program and Offshore Wind Economic Development Program.

Grow NJ ERG

– Base tax credits ranging from $500 to $5,000 per job, per year; bonus credits ranging from $250 to $3,000 per job, per year

– Expanded geographic boundaries– Reduced capital investment and

employment eligibility

– Increased State and local incentive grants - bonus awards to incentivize targeted development goals

– Expanded geographic boundaries– Tax credits allocated for residential

projects

Grow NJAreas of Eligibility

Mega Projects Logistics, manufacturing, energy, defense, or maritime businesses in a port district

or businesses in the aviation industry located in an aviation district with: 1) Cap. investment of $20 million+ and 250 jobs created or retained; or, 2) 1,000 jobs created or retained.

Businesses located in an Urban Transit Hub with cap. investment of $50 million+ and 250 jobs created or retained.

Garden State Growth Zones (GSGZ) Camden, Trenton, Paterson and Passaic – the New Jersey cities with the lowest

median family income based on the 2009 American Community Survey from the US Census

Distressed Municipalities A municipality that is qualified to receive assistance under the Municipal Urban Aid

Program; is under the supervision of the Local Finance Board; identified by DCA to be facing serious fiscal distress; a SDA municipality; or a municipality boasting a major rail station.

Grow NJAreas of Eligibility

Priority Areas Planning Area 1 (Metropolitan), Planning Area 2 (Suburban), a designated center

under the State Development and Redevelopment Plan or a designated growth center in an endorsed plan;

Areas that intersect with portions of: a deep poverty pocket, a port district, or federally owned land approved for closure under a federal Base Realignment Closing Commission action;

Proposed site of a disaster recovery project, a qualified incubator facility, a highlands development credit receiving area or redevelopment area, a tourism destination project, or transit oriented development;

Areas that contain a vacant commercial building having over 400,000 sq.f. of office, lab, or industrial space available for occupancy for a period of over one year; or a site that has been negatively impacted by the approval of a Hub-supported project.

Other Eligible Areas Areas not located within a distressed municipality or priority area, including an

Aviation District; Planning Area 3; certain portions of Meadowlands, Pinelands and Highlands; and certain portions of Planning Areas 4A, 4B & 5.

Grow NJCapital Investment & Employment Requirements

Minimum Capital Investment Requirements $/Square Foot

Industrial – Rehabilitation Projects $20

Industrial – New Construction Projects $60

Office – Rehabilitation Projects $40

Office – New Construction $120

Minimum capital investment amounts are lowered to 2/3 in GSGZs and in eight South Jersey counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, Salem

Minimum FT Employment Requirements New/Retained FT Jobs

Tech Start Ups and Manufacturing Businesses 10/25

Other Targeted Industries 25/35

All Other Businesses/Industries 35/50

Minimum employment numbers are lowered to 3/4 in GSGZs and in eight South Jersey counties: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean, Salem: 8/19; 19/27; 27/38, respectively.

Grow NJBonus – Type & Amount

Bonus Type* Bonus AmountDeep poverty pocket or Choice Neighborhood Transportation Plan area $1,500 Qualified incubator facility $500Mixed-use development - mod. income housing for min. of 20% of full-time employees $500Transit oriented development $2,000Excess capital investment in industrial site for industrial use - Excludes mega projects $3,000 maximumExcess capital investment in industrial site for industrial use - Mega projects or GSGZ projects $5,000 maximumAverage salary in excess of county’s existing average or in excess of average for GSGZ $1,500 maximumLarge number of new and retained full-time jobs

251 to 400401 to 600 601 to 800

801 to 1,0001,001+

$500$750

$1,000$1,250$1,500

Business in a targeted industry $500

Exceeds LEED “Silver” or completes substantial environmental remediation $250Located in a municipality in Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties with MRI Index greater than 465

$1,000

Located within a half-mile of any new light rail station $1,000Projects generating solar energy for onsite use $250

*Summarizes bonus types most widely applicable

Grow NJTax Credit Amounts: Base + Bonus = Gross

*Urban Transit Hub Municipalities include Bridgeton, Mount Holly, Salem, and West New York, in addition to the nine municipalities eligible under the UTHTC Act: Camden, East Orange, Elizabeth, Hoboken, Jersey City, Newark, New Brunswick, Paterson, and Trenton.

Project Type Base AmountPer New or Retained FT Job,

Per Year

Maximum AmountPer New or Retained FT

Job, Per Year

Annual AmountTo Be Applied By The

Business Annually

Mega Project $5,000 $15,000 $30 million

GSGZ $5,000 $15,000 $30 million$35 million-Facility in certain

GSGZ municipalities (Camden)

Urban Transit Hub Municipality*

$5,000 $12,000 $10 million

Distressed Municipality $4,000 $11,000 $8 million

Priority Area $3,000 $10,500 $4 millionbut not more than 90% of

withholdings

Other Eligible Area $500 $6,000 $2.5 millionbut not more than 90% of

withholdings

Disaster Recovery Project $2,000 $2,000

Grow NJFinal Total Tax Credit Amount

Each new full-time job = 100% tax credit

Each retained full-time job = 50% tax credit*

*Tax credits for retained jobs increases to 100% in certain cases

– All projects are subject to a comprehensive net benefit analysis to verify that the revenues the State receives will be greater than

the incentive being provided.

– For projects approved for $40 million or more over the term ($4 million annually), the EDA will award only funds necessary to complete a project or the amount permitted under the statute, whichever is less.

Grow NJFor a project located in Camden:

Jobs – Minimum Cap Investment – Minimum Total Tax Credit Per Job Maximum; equal to the greater of: total tax credit

amount for a qualifying project in a GSGZ or total cap investment of the project divided by the total number of

new full-time jobs

35 $5 million $20 million




250 $30 million Uncapped

ERGIncentive Amounts

State and Local Incentive Grants The Act authorizes a bonus of 10% in certain cases, up to

a maximum of 30% of total project costs; 40% for projects in a GSGZ.

For Local Incentive Grants, up to a maximum of 100% if the developer is a municipal government or redevelopment agency

All projects are subject to a comprehensive net benefit analysis to verify that the revenues the State receives will be greater than the incentive being provided.

ERGBonus Awards

Bonus of up to 10% if project is:

Located in a distressed municipality: – lacking access to nutritious food, and will include a supermarket or grocery

store (min. of 15,000 sq ft of space) selling fresh products or a prepared food establishment selling nutritious, ready to serve meals; or,

– lacking access to health care and health services, and will include a health center (min. of 10,000 sq ft of space) devoted to providing these services

Transit project Qualified residential project with at least 10% of units constructed as and

reserved for moderate income housing Located in a highlands development credit receiving area or redevelopment

area Located in a GSGZ Disaster recovery project Aviation project Tourism destination project Substantial rehabilitation or renovation of an existing structure(s)

ERGQualified Residential Projects

Of the $600 million authorized for qualified residential projects*:

$250 million for projects within Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Ocean and Salem counties, of which:– $175 million for projects in Camden– $75 million for projects in municipalities with a 2007 MRI Index of 400 or higher

$250 million for qualified residential projects located in:– Urban Transit Hubs that are commuter rail in nature– A Garden State Growth Zone– Disaster recovery projects– SDA municipalities located in Hudson County that were awarded State Aid in

FY 2013 through the Transitional Aid to Localities Program

$75 million for projects in distressed municipalities, deep poverty pockets, highlands development credit receiving areas or redevelopment areas.

$25 million for projects located within a qualifying ERG incentive area.

*The Act does not change the existing requirement that residential projects receiving an ERG must dedicate 20% of a project to low and moderate income housing

EDA is no longer accepting applications for assistance under the Business Employment Incentive Program (BEIP), Business Retention and Relocation Assistance Grant Program (BRRAG), and Urban Transit Hub Tax Credit Program (UTHTC).

– All pending BEIP and BRRAG applications will be acted on by December 31, 2013.

– All non-residential, pending UTHTC applications will be acted on by December 31, 2013. Residential applications submitted under the December 2012 competitive solicitation will be acted on within 120 days of the Act's September 18, 2013 effective date.

Businesses that had submitted an application under Grow NJ or ERG before enactment can amend the application to receive more favorable terms under the provisions of the revised programs.

BEIP, BRRAG & UTHTC

Grow NJ and ERGNew Application Deadlines

Grow NJ applications must be filed by July 1, 2019.

– Businesses must submit documentation indicating it has met agreed upon capital investment and employment requirements within three years of EDA approval.

– EDA can grant two, 6-month extensions.

ERG applications must be filed by July 1, 2019.

– Applications for a qualified residential project must be filed by July 1, 2015, and the developer must obtain a temporary certificate of occupancy for the project no later than July 28, 2015.

EDA anticipates launching the new programs in November 2013.

New Jersey Business Action Center866-534-7789www.NewJerseyBusiness.gov

Choose New Jersey, Inc.(609) 297-2186www.ChooseNJ.com

New Jersey Economic Development Authority(609) 858-6675www.njeda.com

Incentive Trends

Tuesday, October 8, 2013

Presenter: Carl S. Nerlich, Senior Manager Northeast Area, Business Incentives Ernst & Young LLP

Agenda

►Understanding the issues

►Investments made in the U.S. during 2012

►EY Survey

►Incentive Trends

►Questions

Understanding the issues

In today’s global economy…

► Global economy = greater competition

► More companies seeking the means to better optimize performance

► State and local governments anxious to stabilize or expand the tax

base, improve business retention, and stimulate job growth

► Global competition for corporate investment in relocation, expansion,

or revocation

… the stakes are high.

Understanding the issues

As a result…

► The role of C&I in attracting and retaining businesses is significantly more influential

► Governments becoming more aggressive to remain competitive

► Need for flexibility and creativity due to budget constraints► International governments are creating incentives to attract targeted

industries

… entities must devote more attention and resources to the design, scale, scope, and accessibility of C&I programs.

Investments made in the U.S. during 2012

Which industries saw investment in 2012?

Sector IndustryInvestment

(in US$ millions) Jobs

Agriculture, construction, oil/gas extraction and services Oil/gas extraction and services 13,870 8,113 Agriculture and construction 905 3,567 Non-durable manufacturing Chemical and petrochemical 34,311 11,119

Rubber and plastics 7,329 6,152 Food and beverage 6,627 20,214 Petroleum and coal products 3,172 7,555 Pharmaceutical 2,868 16,810 Other non-durable 2,323 9,990 Subtotal: Non-durable manufacturing 56,630 71,840

Durable manufacturing Semiconductor and electronic component 13,194 25,419 Transportation vehicle 10,655 38,771 Machinery and fabricated metal 8,942 34,978 Other durable manufacturing 2,625 14,099

Subtotal: Durable manufacturing 35,416 113,267Information Information 2,369 9,305 Data centers 2,293 5,275 Financial and professional services Professional services 3,947 34,835 Financial, insurance, and real estate services 2,963 22,125 Business support services 1,208 21,345 Health care and social assistance 442 1,968 Other services 796 5,638 Subtotal: Financial and professional services 9,355 85,911 Trade and transport Wholesale and retail trade 6,352 35,058 Transport, storage and logistics 4,343 17,799 All included industries Total 131,532 350,135

Source: EY USIM based on Conway data and EY research.

Which states were the most successful at growing employment by attracting facilities?

Source: EY USIM based on Conway data and EY research.Note: Data on California is incomplete.

Top 20 mobile projects ranked by capital investment, 2012


Company Name State ProductInvestment


Sasol Ltd. LA Gas-to-liquids; Petrochemicals 8,500 835

Sempra Energy/Cameron LNG LA LNG 6,000 130

Chevron Phillips Chemical Co. TX Petrochemicals 5,000 400

Samsung TX Semiconductors 4,000 500

Intel Corp. OR Semiconductors 3,000 Undisclosed

GlobalFoundries NY Semiconductors 2,300 250

Shell Oil Company PA Petrochemicals 2,000 450

Formosa Plastics Group TX Plastics 1,700 225

The Dow Chemical Co. TX Petrochemicals 1,700 150

Port Neal Corporation (CF Industries) IA Nitrogen Fertillizer 1,700 100

Williams Partners LP WV Natural Gas 1,340 100

Iowa Fertilizer Co./Orascom Construction IndustriesIA Nitrogen Fertilizer 1,300 165

Cenex Harvest States ND Nitrogen Fertilizer 1,200 150

Celanese Corp. TX Petrochemicals 1,000 Undisclosed

Ineos USA Llc TX Petrochemicals 1,000 Undisclosed

Baxter International, Inc. GA Biological Products 1,000 1,500

The Dow Chemical Co. TX Petrochemicals 1,000 70

Apple, Inc. NV Data Center 1,000 35

Ohio Valley Resources Llc IN Nitrogen Fertilizer 952 80

Benteler Steel & Tube LA Steel Tubes 900 675

Top 20 mobile projects ranked by new and retained jobs, 2012


Company Name State ProductInvestment


Apple, Inc. TX Wireless Equipment 304 3,600

Kohls Corp. WI Clothing 250 3,000

Exxon Mobil Corp. TX Petroleum Undisclosed 2,000

BB&T Corp. NC Financial Services - 1,700

Ericsson TX Telecom Equipment 54 1,600

Baxter International, Inc. GA Biological Products 1,000 1,500

General Motors Co. MI Innovation Center 300 1,500

Caterpillar, Inc. GA Tractors 200 1,400

The Boeing Co. OK Aircraft Undisclosed 1,350

Vistaprint Usa Incorporated MA Printed Products 57 1,180

Wingspan Portfolio Advisors Llc TX Financial Services 3 1,100

Daimler Trucks North America Llc NC Highway Trucks Undisclosed 1,100

Amazon.com, Inc. IN Distribution Center 150 1,050

Bridgewater Associates Limited Partnership CT Financial Services 750 1,000

Airbus AL Aircraft 600 1,000

Panasonic Corp. NJ Consumer Electronics 190 1,000

Philadelphia Energy Solutions PA Oil 140 1,000

Southwest Airlines Co. TX Airlines 100 1,000

Nissan North America Inc. MS Automobiles 20 1,000

Austal Usa Llc AL Ships 5 1,000

EY Survey

Ernst & Young LLP 2013 Survey

► Key Insights► Companies are increasingly active in capturing business

incentives and tax credits► 36% – more active in past two years

► 55% – about as active as in the past

► 7% – less active than in the past

► 2% – don’t know

► C-suite executives otherwise occupied► 16% – “very” aware of the potential benefits

► 36% – somewhat aware

► 20% – not at all aware

► 28% of executives responding to the question, say their most senior executives are more aware


► Nearly 7 out of 10 executives – 68% – expect their companies to pursue significant if not aggressive capital expansion over the next 24 months.► 34% – anticipate moderate growth (5% - 10%)

► 19% – anticipate strong growth (10% - 20%)

► 15% – anticipate aggressive growth (20% plus)

► 25% – no change

► Resources devoted to C&I► 87% – less than 1 FTE

► 11% – 1-3 FTEs

► 2% – greater than 3 FTEs

► Nearly half of executives, 48%, say their organizations have no tools to track and analyze business incentive and tax credit activities.


Barriers► Respondents reported a range of hindrances to capturing

incentives, such as: ► Too busy to execute on the requirements

► Program requirements too burdensome

► Lack of timely information on transactions

► Company is in a loss position and cannot take advantage of tax credits

Feedback for Governments/Economic Development► Address corporate challenges in C&I

► Develop more streamlined application and approval processes

► Require less in terms of back-end administrative compliance

► Offer more in terms of sale, assignment, or transfer mechanisms

Incentive Trends

Key trends for credits and incentives

► Governors focused on eliminating income tax► Examples: Louisiana, North Carolina, Nebraska

► Alternate revenue sources cited to be sales tax

► State income tax credits

► Rise in non-income tax incentives

► Rise in tax credit transferability and monetization

Other trends impacting incentives

► Globalization continues as do global incentives► Re-shoring on the rise

► Resurgence in manufacturing underway► Re-invention and re-tooling

► Utility and transportation costs

► Labor costs (increased skills)

Company preferences in the new economy

► Cash grants or cash equivalents

► Above the line savings

► Non-income tax benefits, including exemptions/rebates of transaction taxes

► Unique/creative responses addressing specific business drivers

► Culture of collaboration and acknowledgement of the benefits

associated with win-win result

► Benefits to company

► Benefits to community

► Benefits to workforce

► Benefits to state

► Anticipate performance requirements

How are incentives programs evolving to meet both Economic Development and Company needs?

► Realization

► Increased closing funds

► Withholding tax rebates

► Negotiability - flexibility

► Targeted sectors (e.g. data centers) and demographics

(veterans, unemployed workers)

► Sustainability incentives

► Supply chain spin-offs

► Workforce re-investment

State trends for incentives

► States are leaving the traditional “Tier Based” incentive programs and are moving towards more cash based incentives.

► Ex. cash grants, refundable/monetized tax credits, sales and use tax refunds, etc.

► Front loading of property tax abatements to offset start-up costs

► Monetizing of income tax credits

► Expedited permitting / fee waivers

► Sales and Use tax rebates and exemptions

► Equipment, energy used in manufacturing, construction materials

► Utility incentives

► Climate and Sustainability incentives

► Designation of special incentive zones

► Enterprise Zones, Opportunity Zones, Brownfield sites, etc.

Questions

Contact

► Carl S. NerlichErnst & Young LLPNew York, NY+1 212 773 [email protected]

Circular 230 disclaimer

Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice.

c orenet global nj chapter attracting business to the garden state lt. governor kim guadagno

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new jersey partnership

generating buzz slide

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new jersey michael winter

business business advocacy

executive director slide

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