New Jersey Administrative Code › Title 19 - OTHER AGENCIES › NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY › Chapter 31D - ECONOMIC REDEVELOPMENT AND GROWTH PROGRAM › Subchapter 1 - ECONOMIC REDEVELOPMENT AND GROWTH PROGRAM › Section 19:31D-1.6 - Financing gap and fiscal impact analysis

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The
				  Authority, in consultation with the State Treasurer, shall review the proposed
				  project costs and evaluate and validate the project financing gap estimated by
				  each developer applying for a State incentive grant, as follows:
1. The Authority will evaluate proposed
				  project costs against reasonable costs as noticed on the EDA website at
www.njeda.com
for the standard of review,
				  which shall include, but not be limited to, construction, tenant fit out,
				  consultants, rental rates, rates of return and vacancy allowances. For a
				  project involving university infrastructure, in validating the project
				  financing gap, the Authority may rely on a certification of the Chief Financial
				  Officer of the university that, based on current university budget projections,
				  a financing gap exists;
2. For a
				  redevelopment project involving rehabilitation or improvement of an existing
				  building(s), the costs of land acquisition and rehabilitation shall not exceed
				  100 percent of the replacement cost for new construction, exclusive of any
				  environmental remediation costs. When evaluating a redevelopment project
				  involving rehabilitation or improvement of existing building(s), if a developer
				  spends more than 100 percent of the total cost of acquisition of the
				  building(s) on such rehabilitation or improvement, then the cost of acquisition
				  shall be included in the eligible project costs. With respect to the
				  Authority's evaluation of a redevelopment project pursuant to the requirements
				  of N.J.A.C. 19:31D-1.3(a)2i, a developer's future expenditures will have to be
				  at least 100 percent of the project costs previously expended as of its
				  application date in order for the Authority to include the costs expended prior
				  to the application date to be included in the project costs;
3. For large, multi-phased projects that are
				  built sequentially over time, the EDA shall only evaluate and validate the
				  project financing gap on phases of the project with funding
				  commitments;
4. The project
				  financing gap analysis shall include, but not be limited to, an evaluation of
				  the project costs, amount of capital sufficient to complete the project,
				  proposed rental rates, vacancy rates, internal rate of return on developer's
				  contributed capital, and return on investment, or, in the Authority's sole
				  discretion, in comparison to alternative financing structures for a comparable
				  project available to the developer or its tenants; and
5. Except for final point of sale retail
				  businesses, including, but not limited to, retail, educational, hospital, or
				  hotel projects, the project financing gap will include the amount by which the
				  total project cost exceeds the cost of a viable alternative location for the
				  out-of-State redevelopment project in the event the business's chief executive
				  officer, or equivalent officer for North American operations, submits a
				  certification indicating that the project is at risk of leaving the State or
				  not being located in the State and that the project would not occur but for the
				  provision of the incentive grant under the program. In the event that this
				  certification by the business's chief executive officer, or equivalent officer,
				  is found to be willfully false, the Authority may revoke any award of an
				  incentive grant in its entirety, which revocation shall be in addition to any
				  other criminal or civil penalties that the business and the officer may be
				  subject to.