The deadline for businesses to apply for Urban Transit Hub tax credits is a year off, but the Economic Development Authority's chairman has ordered a fiscal analysis to determine what's left in the bank as the pipeline of projects awaiting review grows deeper.
An exact picture of the finances may be complicated, though, by ongoing uncertainty between the EDA and Prudential Financial Inc. over the status of a $250.8 million tax credit the insurer was approved for to develop a new office tower near the New Jersey Performing Arts Center, in downtown Newark.
Agency CEO Caren Franzini said at last week's board meeting that the EDA will complete a financial analysis of the four-year-old program to study future demand for the credits and outline how much remains to be allocated. That analysis is expected to be presented at the board's Feb. 14 meeting.
Board Chairman Alfred C. Koeppe, who requested the study, said last week it was crucial for the agency to gauge the viability of projects that have applied for Urban Transit Hub credits, but have yet to be considered. The EDA has a "pretty deep pipeline" of such projects, he said, but the agency is quickly approaching the $1.5 billion cap set by lawmakers when the program was created.
"We have to be certain our financial analysis is really deep, because as the funds diminish, we can't afford to not have absolute certainty," Koeppe said. "We can't waste our time focusing on opportunities that may not be real."
While it hasn't been "an unreasonable amount of time" since the EDA approved Prudential's application, "there is a limited amount of funds," Koeppe said.
"There are undoubtedly other developers who have other interests, who need the support that could provide," he said. "And it's incumbent on Prudential to make the decision."
Projects approved under Urban Transit Hub receive the tax credits after meeting capital investment and job creation requirements. An NJBIZ analysis of the program found about $916 million in tax credits had been approved for 15 projects through last week. In addition, $200 million in tax credits have been set aside for the Grow New Jersey Assistance Program, another development incentive bank, and another $100 million has been designated for offshore wind projects under a 2010 law, though the status of that program was not immediately clear last week.
But the Prudential award, approved Nov. 9, makes up a big chunk of the credits, and that may be complicated by the insurer's continued search for an appropriate construction site. It listed 3 Center St. on its application, and EDA approved the award for that location, but Prudential believes it can use the tax credit for any site, as long as it builds within a half-mile of Newark Penn Station, said spokesman Bob DeFillippo. When asked how Prudential came to believe that, or who told the insurer that, DeFillippo said he was not sure.
Prudential said in its application it "was seeking to make a final decision confirming the viability of new construction" by the end of 2011, and start construction of the new building in third quarter 2012. Asked about those benchmarks, DeFillippo on Jan. 13 said, "The process is taking the time it takes to get this done."
EDA spokeswoman Erin Gold said she couldn't say what would become of the tax credit if Prudential were to choose a site other than 3 Center St. for construction. But according to Koeppe, "From an EDA perspective, it's irrelevant where the site is in Newark," though the agency would likely have to reconsider the application if Prudential identified a different location.
The EDA analyzed Prudential's application based on 3 Center St., Koeppe said, but it would be a "mistake" for the agency to maintain an interest in a specific site or developer. Koeppe abstained from the EDA's Nov. 9 vote because the nonprofit organization he leads, the Newark Alliance, works with Prudential in work force development training.
"It's important for (the site) to be irrelevant," Koeppe said. "Our job, our obligation is to look at the urban hub tax credit as an urban hub tax credit, not as a developer-specific or a location-specific tax credit for that urban center."
Additional reporting by Andrew Kitchenman and Sharon Waters.
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