As of August 16, 2021, the New Jersey Economic Development Authority (NJEDA) has commenced accepting applications for commercial projects under the Economic Redevelopment and Growth (ERG) Program. The Commercial ERG Program is an incentive that is designed to assist developers and businesses address project financing gaps in development or redevelopment projects, including below market development margins or rates of return.
A link to the application and more information is available at https://www.njeda.com/erg.
Qualified projects are eligible to receive an incentive grant reimbursement of up to 30% of total “eligible project costs”. Moreover, projects in Atlantic City, Camden, Paterson, Passaic, and Trenton are eligible to receive reimbursements up to 40% of eligible project costs. Subsidies awarded through the ERG Program are not meant to be a substitute for conventional debt and equity financing.
Prior to applying, prospective applicants are required to have the balance of their funding identified or in place or be able to demonstrate that any terms of other financing are reasonable.
Among other requirements, projects must:
• Be located in a qualifying incentive area.
• Demonstrate that a project financing gap exists.
• Be predominantly commercial and contain 100,000 or more square feet of retail, office, and/or industrial uses for purchase or lease.
• Not have commenced any construction at the site of a proposed redevelopment project prior to submitting an application or demonstrate to the NJEDA that the project would not be completed otherwise or is to be undertaken in phases.
• Demonstrate the tax revenues the State will realize from the project will be greater than the incentive being provided.
Additional information on eligibility for the Commercial ERG Program can be found at the 2021 Commercial Extension Clarification Document at https://www.njeda.com/erg.
All applicants are required to submit an application via the NJEDA’s online application at https://application.njeda.com/. Applications will be accepted on a first-come, first-served basis until funds are exhausted or Thursday, December 30, 2021.
Duane Morris has an active team of lawyers who have been engaged in the review and dissemination of P-3, public private partnerships and incentives related alerts, blogs and advice on various P-3 and incentives related topics. Please see our website for a few list of all available articles and blogs.
If you have any questions or thoughts, please contact Brad A. Molotsky, Paul Josephson, Mike Barz, Nat Abramowitz or any of the Duane Morris lawyers you regularly engage with.
Be well and stay safe.
University of Maryland – Energy Public Private Partnership (P-3) RFQ – due July 29th
The University of Maryland (UMD) is proposing a public private partnership (P3) to implement the NextGen Energy Program (NextGen) in order to renew and modernize the University of Maryland, College Park’s aging energy system. Under the proposed P3, UMD will contract with a private sector entity to design, engineer, finance and install energy system improvements. After improvements are completed, the entity will also manage, operate and maintain UMD’s energy systems moving forward.
The University of Maryland has more than 41,000 students, 14,000 faculty and staff, and 377,000 alumni. The main campus is located in College Park, MD.
On April 27, 2020, UMD issued a Request for Qualifications (RFQ) seeking qualifications for entities to improve, manage, operate and maintain the UMD’s central heating, cooling and electrical generation and distribution systems to ensure the UMD receives long-term reliable, efficient, sustainable and affordable energy services.
According to a Pre-Solicitation Report (PSR) dated January 31, 2020, UMD recommended two primary commercial structures for implementing the NextGen Program, either (i) a 501(c)(3) type Structure, or (ii) a Concession (Availability Payment) Structure. Under the 501(c)(3) type Structure, UMD would finance energy system capital improvements through a tax exempt entity and contract with a private sector entity to design, engineer and install those improvements and manage, operate and maintain the energy systems.
In the past, the Maryland Economic Development Corporation (MEDCO) has been involved in such projects. Under the Concession Structure, a private sector concessionaire would finance capital improvements using a mixture of equity and taxable debt, design and build those improvements and manage, operate and maintain the energy systems.
In the PSR, UMD indicated that it would consider other commercial structures and that it would consider a variety of payment models such as an availability payment for the central energy generation facility and a “base rate” model for the distribution system.
Further, UMD indicated it would also consider an incentive-based compensation model for a continuing program of energy reviews reductions in campus buildings and facilities.
The statement of qualifications are due on July 29, 2020. The PSR identifies the following additional milestone dates – deadline for receipt of proposals in March, 2021, selection of the preferred proposal in June, 2021, the approval by the Maryland Board of Public works in April – May, 2022 and a financial closing in June, 2022.
The NextGen Energy Program would commence in July, 2022, with UMD preliminarily assuming a construction period of 3 years and an operational period of 30 years, although such time frames are subject to the receipt of final proposals.
Duane Morris has a dedicated P-3 Team to help organizations plan, respond to and address RFQs/RFPs and to structure and execute your P-3 transactions. If you have any questions about this post or have interest in responding to the RFQ and would like some assistance, please contact Tom Totten, Brad A. Molotsky, Joel Ephross or the attorney in the firm with whom you are regularly in contact.
Be well and stay safe!
Looking into the 2019 Crystal Ball – Opportunities (and Zones) Abound
As 2019’s first full week moves towards a close (well, so what if we are working tomorrow or Sunday :)), wishing all fellow P3, public-private partnership and Opportunity Zone participants and those delving into the area, a Happy and a Healthy New Years.
2019 looks to be a busy year in the #OpportunityZone space. With one of the key benefits of the federal program (i.e., a 7-year investment time period with related 15% reduction in invested capital gains) expiring at the end of this coming year, many clients and prospects are extremely focused on deploying capital gains capital into this space in 2019.
My prediction is that if 2019 is anything like the number of calls and conversations and meetings we have been hosting and fielding in the 4th quarter of 2018, it will be a very robust, active and busy year in the OZ space. Having closing multiple deals in the 4th quarter for family office owners, developers and having many on-going conversations regarding Qualified Opportunity Zone businesses and funds, I am very excited for 2019 and all it will bring.
Have a fabulous January and I look forward to speaking with you about OZs and P3s in 2019!
-Brad A. Molotsky