Developers hope additional incentive money can power residential projects
With the passage of a bill that would raise the cap on the Urban Transit Hub tax credit program, residential developers say they have renewed hope the state will reinstate the incentive for use in housing and mixed-use projects.
The Assembly and Senate on Thursday passed a measure that would allow the state to issue another $250 million in tax credits, adding a cushion to a program that has been nearly depleted over the past year. The bill's sponsors have said they expect Gov. Chris Christie to support the measure.
That could be welcome news to residential builders after the Economic Development Authority, which administers the program, temporarily froze several residential projects that applied for the incentive. That was a blow to developers who have increasingly used government incentives to finance mixed-use projects in urban areas, as banks continue to be tight with credit.
"By having these tax credits available, I think it goes a long way," said George Vallone, president of Hoboken Brownstone Co. "The very purpose of it was to provide gap financing for projects that are having difficulty reaching full capitalization. And this is exactly where that type of incentive ought to be targeted."
Vallone, who is second vice president of the New Jersey Builders Association, was one of about 15 developers whose projects were put on hold by the EDA in February. At the time, the agency said it had nearly reached its cap on residential tax credits, and would spend the next several months gauging the demand from commercial developers before deciding whether to approve other applications for housing projects.
The recent bill to raise the Urban Transit Hub's cap was cheered by commercial development groups. But Vallone said raising the allocation for residential projects would be an added bonus for his group, which has an affiliate that represents a host of mixed-use developers.
"We're not just creating housing," Vallone said. "We're creating jobs, because every apartment that is constructed has a ripple effect."
Assemblyman Albert Coutinho (D-Newark) said last week that the EDA's plan called for revisiting its pipeline of residential projects in September. He deferred to the agency when asked how an additional $250 million would help its review process, but said it could only help matters.
"I would assume at this point that really hasn't changed," Coutinho said. "Those projects will have to wait until September — but now obviously EDA will have a lot more flexibility to be able to look at them."
Both Coutinho and co-sponsor Sen. Raymond Lesniak (D-Union) said they expected Christie to sign the bill, pointing to a compromise with the administration that led them to the new legislation. An earlier version of the bill called for raising the program's cap by $1 billion.
Christie's office would not comment on whether he would be signing any bills today.