The New Jersey Economic Development Authority will take a more scientific approach in calculating the maximum internal rate of return for projects seeking assistance under the Economic Redevelopment Growth grant program.
The change was one of two policy changes the board made in its board meeting this morning. The board also approved a new grant to help Rowan University increase its presence in Camden.
The EDA has been using an internal rate of return range of between 15 percent and 20 percent for ERG projects, a range determined by the authority's consultant, Jones Lang LaSalle, to be representative of real estate projects across the state. But under a change approved today, the EDA will now use a new model, also developed with JLL.
The new system calculates a rate based on other projects within a given ZIP code. In places where there aren't enough projects to calculate a statistically significant figure, the model will base the rate on a weighted average of the three nearest "anchor cities." The state's 13 anchor cities are those with enough comparable projects to derive an average return. Rates also are adjusted if a given ZIP code is economically disadvantaged.
Tim Lizura, EDA president and chief operating officer, told the board the idea is to leverage historical ERG data to foster more accurate financial decisions.
"It really is the ability for us to be much more precise in our support and recommendations to you," he said.
EDA board Chairman Al Koeppe said the change is also in line with a move under the Chris Christie administration to bring more clarity to the board's decision-making process.
The new methodology was immediately put to use, as the board approved an ERG grant worth up to $13.5 million for VNO Wayne Town Center LLC to expand and renovate a mall on Willowbrook Boulevard, in Wayne. The new internal rate of return model approved at the meeting actually lowered the amount of VNO's award, from a maximum of $20.2 million.
The board's other policy change amounted to a clarification of the rules regarding the employment test tied to the Business Employment Incentive Program. The program requires BEIP award recipient companies to maintain at least 80 percent of their statewide employment base for a set period of time. The EDA clarified the language in the policy to make clear that the employment base requirement only applies to entities under the recipient company's direct control. In other words, BEIP recipients won't be penalized for downsizings at affiliated companies over which they have no control.
The board also agreed to authorize a $5.1 million grant to Rowan University to construct and renovate the former First Camden National Bank & Trust Building. Once it's complete, Rowan will move at least two full four-year programs to Camden, meaning some students will be able to complete their entire course of studies within the city. The university's Camden campus enrollment has grown from 425 students two years ago to more than 800 now.
Other incentives approved at the meeting included a Grow New Jersey Assistance Program award of up to $16.8 million over 10 years to WWRD US LCC. The company manufactures home and lifestyle products, and currently has its U.S. headquarters and logistics and distribution center in Wall Township. The firm's lease is expiring in May 2014, and WWRD is considering moving to New York. The EDA found 280 jobs are at risk, and approved the Grow New Jersey award in hopes the company will stay in New Jersey and build a new facility in Robbinsville.
The board also approved a BEIP grant, worth $118,000 over 10 years, for Teterboro-based Northern Building Products Inc. to hire an additional 40 employees. The firm also was awarded a $333,000 Business Retention and Relocation Assistance Grant to keep its existing 148 employees in the state. Northern Building Products has operations in New Jersey and New York, and is in the process of evaluating a consolidation of its operations.