Among other initiatives, the stimulus act, which Gov. Jon S. Corzine signed into law late last month, establishes an Economic Redevelopment and Growth Grant program that provides incentive grants to help developers address financing gaps in projects in qualifying "incentive areas"; the incremental increases in tax revenues from the project would be the funding source of those grants. Goldberg dismissed criticism that the legislation provided a giveaway to developers, as the ERG grant program requires eligible projects be subject to municipal review and receive approval from the local finance committee.
Real Estate Advisory board: State’s stimulus will help rescue projects Developers dimiss critics who of tax increment financing under the newly to 25 percent developer’s equity, he said. Mez- Santola, executive vice president of Parsippany- call the slate of incentives a enacted New Jersey Economic Stimulus Act will zanine debt — which was regarded as higher risk, based Woodmont Properties, said, “Municipali- giveaway to real estate industry help to take projects off the shelf by boosting and therefore earned a higher interest rate — ties don’t have a full understanding of how this investor confidence and providing developers would fund the remainder, Goldberg said during program is going to benefit them.” under ERG, By EvElyN lEE with an additional source of funding. an editorial board meeting with NJBIZ last week. the state cannot fund more than 20 percent of the ALTHOuGH THE RECESSION and credit crunch Among other initiatives, the stimulus act, But with mezzanine debt now gone, tax incre- total project cost, and developers are required to have largely stalled real estate development in which Gov. Jon S. Corzine signed into law late ment financing would help to fill that gap. make a 20 percent equity contribution, he said. the state, members of the Governor’s Real Estate last month, establishes an Economic Redevelop- “This provides another level of financing “Everybody has skin in the game,” he said. Advisory Board contend that an alternative form ment and Growth Grant program that provides that’s not in the market today that could stimulate Goldberg, meanwhile, defended limita- incentive grants to help developers address confidence in either the capital markets or with tions in other aspects of the legislation — such financing gaps in projects in qualifying “incen- our banks, and even with our own members,” said as the fact that the urban Transit Hub Tax tive areas”; the incremental increases in tax Tim Touhey, chief executive officer of the New Credit program remains restricted to nine cit- “You have to walk before revenues from the project would be the funding Jersey Builders Association, in Hamilton, and a ies, despite other revisions made to that initia- you run.” source of those grants. ERG replaces the previ- member of the advisory board. “There is perma- tive. The program is a pilot, he said, and “you Carl Goldberg ous Revenue Allocation District program, where nent debt out there today, it’s not completely fro- have to walk before you run.” tax increment financing was based on future zen … this comes in to provide that capital piece If the tax credit is successful in bringing anticipated taxes, rather than actual taxes. you need to get to the permanent debt.” new businesses and adding jobs to those nine “One of the consequences of the chang- Goldberg dismissed criticism that the leg- cities — Camden, East Orange, Elizabeth, Hobo- Christina Mazza es in the macroeconomic condition has been islation provided a giveaway to developers, as ken, Jersey City, Newark, New Brunswick, Pat- the complete disappearance of what used to be the ERG grant program requires eligible proj- erson and Trenton — it is likely “the Legislature called mezzanine financing,” said Carl Goldberg, ects be subject to municipal review and receive will look favorably about expanding the geogra- a partner at Roseland Property Co., a real approval from the local finance committee. phy to other qualified urban municipalities with estate developer based in the Short Hills Also, the Economic Development Authority bona-fide mass transportation outlets,” he said.
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