New Jersey's Emerge Program
The Emerge Program ("Emerge") is a new economic development incentive program signed into law by Governor Murphy in January 2021 as part of the New Jersey Economic Recovery Act of 2020. Emerge is intended primarily to attract new companies to the state and retain New Jersey companies with significant employment. The New Jersey Economic Development Authority (the "Authority") administers the Emerge Program.
Emerge is a state tax credit calculated as an amount per job created or retained, available annually for up to seven years. The base annual tax credit ranges from $500 to $4,000 per employee, determined by location.
The incentive offers 18 bonuses that may increase the annual tax credit to range from $3,000 to $8,000 per employee, for a potential 7-year total tax credit ranging from $21,000 to $56,000 per employee. Job creation projects qualify for 100 percent of the tax credit amount, while retaining existing jobs receive 50 percent of the total tax credit. Companies may sell unused tax credits for at least $0.85 per $1.00 of a tax credit.
Emerge requires companies to create a minimum of 35 new full-time jobs. Companies in targeted industries must create 25 new full-time jobs. To qualify for Emerge as a retention project, companies must have at least 1,000 existing jobs in New Jersey, while companies in targeted areas must retain 500 existing New Jersey employees.
Emerge requires a minimum capital investment to qualify. Existing industrial, warehouse, logistics, and R&D building projects must have a capital investment of at least $20 per square foot, and new construction must have a capital investment of $40 per square foot. Existing office building projects must have a capital investment of at least $40 per square foot and new office construction of $120 per square foot.
Companies having projects that fall short of the minimum requirements may donate the difference to an infrastructure fund to qualify.
Qualified Business Location
Emerge is site-specific, meaning applications must target a single Qualified Business Location ("QBF") for consideration in an incentive eligible location. Requirements include:
Material Factor requires at least one site outside New Jersey in competition as an alternative to New Jersey.
A detailed cost-benefit analysis comparing the competing locations.
The QBF must accommodate at least 50 percent of the eligible employees, and eligible employees must spend 80 percent of their work time in New Jersey, but not necessarily at the QBF.
Companies must commit to remaining at the QBF for 1.5 times the eligibility period or a maximum of 10.5 years.
Net Benefit to the State
All projects must meet a net positive benefit to the state of at least 400 percent of the requested tax credit. Companies located in targeted areas will have the net positive benefit reduced to 300 percent or 200 percent, depending on project location. These percentages are significantly higher than the previous Grow NJ, which had a net positive benefit of 110 percent in most areas. Typically, the number of employees and average wages have the most significant impact on net positive benefit.
Community Benefits Agreement
All companies with total project costs exceeding $10 Million must negotiate a Community Benefits Agreement ("Agreement") with the local municipality or county. The Agreement may include training, employment opportunities, and other services offered to underserved communities in and around the QBF community.